Naira maintained stability against the dollar in five months this year, despite the declining foreign exchange (FX) market turnover at $629.95 million over the same period, data from the Central Bank of Nigeria (CBN) indicated.
Naira/dollar exchanged at N415 and N416/$ between January 2022 and May 2022 at the Investors and Exporters (I&E) forex window, the nation’s official foreign exchange (FX) window.
The monthly FX turnover, which showed the level of activity at the official market declined by 0.65 percent to $124.32 million in May 2022 compared to $125.14 million in January 2022.
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Nigeria’s foreign exchange market has continued to witness dollar shortages amid increased demand as Nigeria continues to struggle with diversifying and improving foreign exchange inflows, analysts said.
A breakdown of the exchange rate and the FX turnover during the period under review showed that naira exchanged with the dollar at N415.95 per dollar, while the turnover stood at $124.32 million in May 2022, in April 2022, the cost of dollar was N415.53/$ and the FX turnover was $143.55 million.
The data showed that in March 2022 naira was N416.03 per dollar while the FX turnover stood at $125.94 million, in February 2022, the FX turnover was $0.111 billion while naira exchanged with the dollar at N416.95/$, and in January 2022, naira/dollar exchange rate was N416.03 as the FX turnover dropped to $125.14 million from the level it was in December 2021 ($205.64m).
“The average exchange rate of the naira was relatively stable at the I&E window relative to the preceding month. The average exchange rate of the naira per US dollar at the I&E window was relatively stable at N415.95/US$, compared with N415.53/US$ in April,” the CBN said in its monthly economic report in May 2022.
According to the report, total foreign exchange sales to authorised dealers by the Central Bank were US$1.18 billion, a decrease of 24.4 per cent, below US$1.56 billion in April.
A breakdown shows that foreign exchange sales at the I&E and interbank/invisible windows decreased by 37.9 per cent and 0.7 per cent to US$0.16 billion apiece, below their respective levels in the preceding month.
Similarly, SMIS and matured swap contracts fell by 7.0 per cent and 71.4 per cent to US$0.64 billion and US$0.10 billion, respectively, compared to the amounts in April. However, foreign exchange sales at the Small and Medium Enterprises (SMEs) window rose by 8.4 per cent to US$0.12 billion in the review period.
Further analysis shows that foreign exchange inflow through the CBN decreased by 14.2 per cent to US$2.12 billion from US$2.47 billion in the preceding month, largely attributed to a 47.2 per cent decline in crude oil export receipts. Autonomous inflow also fell by 19.2 per cent to US$3.31 billion from US$4.09 billion, due to decreases in total over-the-counter (OTC) purchases.
Foreign exchange outflow through the Bank declined by 25.8 per cent to U$2.12 billion from US$2.86 billion in April, attributed, largely, to decreases in matured swap transactions, drawings on letters of credits (LCs), third party MDAs transfers, and foreign exchange sales at the I&E and the Secondary Market Intervention Sales (SMIS) windows. Autonomous outflow, declined by 7.5 per cent to US$1.01 billion from US$1.09 billion in April, on account of lower invisible imports. Consequently, a net outflow of US$0.005 billion was recorded through the Bank, compared with US$0.39 billion in April.
