Naira Bounces Back against US Dollar despite Crash in Turnover in 2 Weeks

• The Nigerian currency, the naira, gained marginally against the dollar in the official market
• Data from the FDMQ Exchange shows that the naira appreciated from N1,579.89 to N1,579.22 per dollar on Monday, August 19, 2024
• Analysis shows that FX turnover tumbled in the first two weeks of August, leading to the naira depreciating by five per cent

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Nigerian currency, the naira, appreciated against the US dollar in the official market after the Central Bank of Nigeria (CBN) updated its FX trading reports.

According to the apex bank, the naira depreciated against the British pound but improved against the dollar and the euro in the official foreign exchange market. 

CBN updates FX rates

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In an updated exchange rate on its website, the CBN said the naira exchange rate against the pound fell marginally to N2,035/£1 after trading on Friday, August 16, 2024.

However, the naira appreciated the dollar on Monday, August 19, 2024, trading at N1,579.22 per dollar as against the N1,579.89 traded on Friday, August 16, 2024.

Data from the FMDQ Exchange shows that currency buyers and sellers quoted the dollar at a high of N1,601.50 and a low of N1,470 per dollar.

FX turnover declines in August

The development comes amid a decline in the FX turnover in the official market at $162.99 million.

According to reports, the FX market experienced a decline in turnover in the first two weeks of August despite the CBN's actions to boost supply via the Retail Dutch Auction System (rDAS).

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Data reveals a significant dip of $409 million, with a total turnover declining to about $1.5 billion between August 5 and August 11, 2024, compared to the $1.91 billion recorded between July 22 and August 2, 2024.

Meanwhile,  a weekly breakdown shows a 15% increase in turnover between the first and second weeks in August, rising from $698.01 million to $804.74 million.

The naira also depreciated by about 5% during the review period, moving from N1,500.32 per dollar on July 22, 2024, to N1,579.22 as of August 19, 2024.

Analyst asks CBN to keep the momentum

Analysts believe the CBN's rDAS action in the first week of August has waned, and FX sales need to be shored up again.

Senior banker and economic analyst Janet Ogochukwu said that the CBN needs to sustain its interventions in the FX market to keep the naira from experiencing volatility that might scare investors away.

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“During the week the rDAS happened, the naira responded positively and appreciated for over a week before it slumped again.

“The only way for the naira to maintain its momentum against major currencies is by the CBN's continuous interventions in the FX markets because the markets are in constant demand for FX.

“And now that the federal government has provided import duty-free window, importers’ demand for FX will grow so that they don’t miss out on the window,” she said.

CBN crashes Customs FX rates for cargo clearance

Legit.ng earlier reported that the CBN adjusted the exchange rates for cargo clearance in Nigeria’s ports.

The apex bank crashed the rate from N1,583 per dollar to N1,578.265 despite the official exchange rate crashing to N1,579.89.

Data from the FMDQ Exchange shows that the naira depreciated from N1,564.4 per dollar to N1,579.89 on Friday, August 16, 2024, showing that the naira depreciated by N15.49.

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CBN quotes new exchange rates as naira depreciates against US dollar, pound, euro

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

Source: Legit.ng