CBN, Access, Zenith, UBA, Others Sell $9.9 Billion as Traders Quote New Rates for Naira Against USD
- The Nigerian forex market experienced a surge in dollar inflow in August to the tune of $9.9 billion
- A report by FMDQ released on Tuesday, September 24, 2024, shows that the FX market is experiencing increased confidence
- However, the inflows were not enough to help the naira as it depreciated to N1,658 per dollar on Tuesday, September 24, 2024
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The volume of FX turnover through the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose to N15 trillion in August 2024.
The development came as the Central Bank of Nigeria (CBN) disclosed that foreign inflow into Nigeria in the same period increased to $585 million in August.
Source: Getty Images
Naira depreciates despite massive inflows
On Tuesday, September 24, 2024, the naira depreciated against the dollar from N1,659 to N1,658 per dollar in the official market, while the parallel market dealers sold the US greenback at N1,670 per dollar.
According to the CBN, the impressive FX turnover via NAFEM represents a significant monthly increase of 33.88% in addition to N2.51 trillion recorded in July’s turnover of N13.23 trillion.
Experts believe this surge shows increased trading activity and investor engagement in the FX market.
Commercial banks, CBN, and international oil companies are major sellers of FX at NAFEM.
FMDQ’s monthly report for August shows that the increase in turnover was driven by the rise in transactions in Treasury Bills, OMO Bills, and FGN Bonds, while transactions in other bonds recorded a monthly increase of 18.43%.
The naira experienced continued depreciation despite increased FX turnover, contributing to increased exchange rate volatility.
The report said:
“Spot FX market turnover was $9.90bn (N15.74tn) in August 2024, representing a 33.88 per cent ($2.51bn) MoM increase from the turnover recorded in July 2024 ($7.39bn).”
The trajectory of the depreciation in August
It also noted that the total secondary market turnover on the FMDQ Exchange was N40.43 trillion, representing a monthly increase of 31.97% and a yearly increase of 128.57% at N22.74 trillion from July 2024 and August 223 figures.
The FMDQ report added that foreign exchange and money market transactions dominated secondary market activity, accounting for 69.98% of the total secondary market turnover in August 2024.
Punch reports that the naira traded within the range of N1,543.84 to N1,617.08, showing heightened fluctuations compared to the previous month’s range of N1,500.32 to N1,6122.12.
Per the report, the average spot rate increased by 1.68% at N26.24 to close at N1,586.65, relative to N1,560.32 in July.
In August, the apex bank auctioned about $876.26 million to end users via 26 commercial banks to strengthen the naira.
The development saw the naira appreciate temporarily against the dollar at N1,596.52 from N1,601 per dollar.
CBN hikes Customs exchange rates to clear cargoes
Legit.ng earlier reported that the CBN had hiked the exchange rate for clearing goods at Nigeria’s sea and airports.
The apex bank hiked the price from N1,564.92 per dollar to N1,587.847 on Sunday, September 22, 2024.
The development means that importers will pay N1,587.847 per dollar to apparent goods from air and sea ports across the country.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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