The foreign exchange (FX) market turnover, on Friday, recorded the highest single day trade in six months of $616.73 million.
However, this did not impact the naira, which closed the five trading days with a marginal loss of 1.2 percent or N18.7 as the dollar was quoted at N1,641.27 on Friday compared to N1,622.57 on Thursday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ indicated.
The FX market turnover increased by 323.69 percent or $471.17 million from $145.56 million recorded on Thursday.
Foreign exchange (forex) market turnover refers to the total volume of currency traded over a certain period, usually measured in terms of both buying and selling activities. It does not directly represent the amount of dollars or any specific currency in the market.
On a weekly basis, the naira lost 0.61 percent or N10.06 as the dollar closed at N1,641.27 on Friday from N1,631.21 closed on Friday, the previous week at the NAFEM.
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The local currency also depreciated at the parallel market also known as the black market, losing 2.06 percent week-on-week against the dollar. The dollar quoted at the rate of N1,700 on Friday as against N1,665 quoted a week before on the black market.
In March 2024, the Central Bank of Nigeria (CBN) sold $10,000 to registered Bureau De Change (BDCs) at a rate of N1,251 per dollar, allowing a maximum selling price of N1,269 per dollar for eligible customers.
On April 8 2024, the CBN sold another USD10,000 to BDCs at N1,101 per dollar, maintaining the same 1.5 percent markup condition. The CBN intervened again on September 26, selling approximately USD20,000 to BDCs at a rate of N1,590 per dollar, with a profit margin of 1 percent allowed.
The intervention led to an increase in trade volume on September 26, with daily forex turnover reaching USD575.7 million, one of the highest figures since May 24, 2024, when daily turnover stood at USD610.7 million, according to a report by FBNQuest.
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Data from the FMDQ shows that the naira’s performance in September was the strongest since June 2024, when it closed at N1,505 per dollar in the official window. In early September, the NAFEM window’s official exchange rate was N1,585 per dollar, which marked a 2.8 percent improvement to N1,541.9 per dollar by the end of the month.
Furthermore, the Organisation of Petroleum Exporting Countries (OPEC) recently dismissed a forecast that crude oil prices could fall to USD50 per barrel, a situation that could have negative implications for the naira. In addition, the government announced tax breaks for deep offshore oil and gas projects and implemented VAT exemptions on goods such as liquefied petroleum gas (LPG), compressed natural gas (CNG), and diesel.
“Given the country’s increased oil production, the recently enacted tax relief measures, and OPEC’s stance on declining crude oil prices, we anticipate reduced naira volatility in the near term,” analysts at FBNQuest stated.
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