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.
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.