Nigerian Banks FX trade turnover declines by 14.49%
The foreign exchange (FX) trade turnover between Nigerian banks in the Spot, Forwards and Futures markets for the week-ended June 4, 2021, declined by 14.49 percent to $1,069.71 million from $1,250.97 million reported for the week-ended May 28, 2021, according to FMDQ.
The week-on-week (WoW) decrease in turnover was driven by the 24.75% ($222.62 million) decrease in the FX Spot turnover.
The FMDQ publishes Weekly Foreign Exchange Market analysis report every week. The report showed that Week-on-Week increase in FX Derivatives turnover was driven by the increase of 59.39 percent ($113.05 million) in FX Futures turnover, resulting in an increase in FX Derivatives’ contribution to total FX market turnover, by 14.22 Percentage Points to 28.10 percent from 13.88 percent recorded in the previous week.
In the Investors’ & Exporters’ (I&E) FX Market, the total value of transactions for the week-ended June 4, 2021, was $676.80 million, representing a decrease of 24.75 percent ($222.62 million) from $899.42 million traded in the week-ended May 28, 2021.
For the week-ended June 4, 2021, the weekly average Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate was $/N410.74 compared to $/N410.91 recorded in the previous week-ended May 28, 2021, representing an appreciation of the Naira against the United States (US) Dollars by $/N0.17.
In the Bureau-de-Change (BDC) market, the Naira depreciated against the US Dollars by $/N8.00 to close the week-ended June 4, 2021, at an average rate of $/N495.00, representing a 1.64 percent depreciation when compared to $/N487.00 recorded in the previous week, resulting in a spread of $/N84.26 between the weekly average BDC rate and NAFEX rate.
The report noted that in the FX Futures market, $303.40 million worth of FX Futures contracts were traded in four (4) deals, representing a WoW increase of 59.39% ($113.05 million) when compared to $190.35 million traded in 22 deals recorded in the week-ended May 28, 2021.
The foreign exchange trading week ended on Friday with Nigeria’s currency falling to lowest against the dollar since seven months on the parallel market.
Naira fell to N502 per dollar on Friday, the lowest since November 30, 2020 when it weakened to as low as N510/$ on the black market.
The Naira depreciation was as a result of speculation as speculators took advantage of the Central Bank of Nigeria (CBN) recently adopted exchange rate to buy up and hoard dollars.
After trading on Friday Naira lost 1.41 percent to the dollar, which closed at N502 compared with the opening rate of N495 on Monday.
Week-on-week, Naira appreciated by 0.43 percentage points to 1.41 percent from 1.85 percent closed the previous week on the black market.
Naira has been on a steady depreciation since the week. Day-on-day, Naira weakened by N1.00k as the dollar close at N496 on Tuesday from N495 on Monday. It also lost N2.00k to the dollar on Wednesday when it closed at N498 from N496 on Tuesday. The local currency further weakened by N1.00k against the dollar on Thursday to N499/$ as against N498 on Wednesday on the black market.