Nigeria’s total Foreign Exchange (FX) turnover in the Spot, Forwards and Futures markets for the week-ended June 18, 2021 declined by 15.22 percent to $583.88 million from $688.72 million reported for the week-ended June 11, 2021.
The week-on-week (WoW) decrease in turnover was driven largely by the 9.03% ($48.55 million) decrease in the FX Spot turnover, according to a report by the FMDQ.
A foreign exchange spot transaction, also known as FX spot, is an agreement between two parties to buy one currency against selling another currency at an agreed price for settlement on the spot date. The exchange rate at which the transaction is done is called the spot exchange rate, according to wikipedia.
The Week-on-week drop in FX Derivatives turnover was driven by the decline of 68.26 percent ($39.12 million) in FX Futures turnover, resulting in a 5.70 percentage points reduction in FX Derivatives’ contribution to total FX market turnover from 21.92 percent recorded in the previous week to 16.22 percent.
In the Investors’ & Exporters’ (I&E) FX market, the total value of transactions for the week-ended June 18, 2021, was $489.19 million, representing a decrease of 9.03 percent ($48.55 million) from $537.74 million traded in the week-ended June 11, 2021.
For the week-ended June 18, 2021, the weekly average Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate was $/N410.33 compared to $/N410.25 recorded in the previous week-ended June 11, 2021, representing a depreciation of the Naira against the United States (US) Dollar by $/N0.08.
The report noted that in the parallel market, the Naira appreciated against the US Dollar by $/N2.55 to close the week-ended June 18, 2021, at an average rate of $/N496.25, representing a 0.51 percent appreciation when compared to $/N498.80 recorded in the previous week.
Consequently, the spread between the weekly average parallel market and NAFEX rate decreased WoW by 2.97 percent ($/N2.63) to $/N85.92 in the week-ended June 18, 2021, from $/N88.55 recorded in the previous week.
In the FX Futures market, $18.19 million worth of FX Futures contracts were traded in seven deals, representing a WoW decrease of 68.26 percent ($39.12 million) when compared to $57.31 million traded in nine deals recorded in the week-ended June 11, 2021.
The foreign exchange market traded for four days against five normal days due to the one day holiday declared by the Federal Government to mark the nation’s democracy day on Monday.
The four trading days ended on Friday with Nigeria’s currency closing strong against the dollar across foreign exchange markets, in spite of low liquidity.
Naira gained 1.38 percent or N7.00k against the dollar as the Naira/dollar exchange rate closed at N498 on Friday compared to N505 the opening rate on Tuesday at the parallel market popularly called black market.
Within the week the market witnessed fluctuations in exchange rates across market segments driven by demand and liquidity position.
Naira which opened at N505 per dollar on Tuesday, strengthened to N502 on Wednesday. It firmed further to between N480 and N485 during intraday trading on Thursday and settled at N493/$ on the same day at the black market.
At the Bureau De Change (BDC) segment of the foreign exchange market, Naira gained 3 percent or N15 over the dollar as the market closed at N485 per dollar on Friday from the opening rate of N500 on Tuesday.
