Naira Depreciates by N38/dollar Despite Increase in FX Market Turnover

• The naira depreciated against the dollar in October 2024 as the foreign exchange market remained unstable
• The naira ended October trading at N1,675.49/$, which was far higher than N1600, according to FMDQ statistics
• The research claims that money market and foreign exchange trades dominated secondary market activity

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

As the forex market continued to be volatile in October 2024, the naira lost value in relation to the dollar, according to the FMDQ Exchange, which is home to the Nigerian Autonomous Foreign Exchange Market.

This was mentioned in the most recent October 2024 FMDQ Exchange Financial Markets Monthly Report, which was made public on Thursday.

The study states that the spot FX market turnover in October 2024 was $10.08 billion (N16.36 trillion), which was a 6.58 percent ($0.62 billion) month-over-month gain over the $9.46 billion turnover in September 2024.

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“In the FX market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 2.38 per cent ($/N38.82) to close at an average of $/N1,631.71 in October 2024 from $/N1,592.89 recorded in September 2024.

“Further, exchange rate volatility continued into October 2024 as the Naira traded within an exchange rate range of $/N1,552.92 – $/N1,675.49 compared to $/N1,539.65 – $/N1,6667.42 recorded in September 2024,” the report said.

According to FMDQ data, the naira ended October trading at N1,675.49/$, significantly higher than N1600, even though the Central Bank of Nigeria was working to strengthen it.

The CBN fiat was worth more than N1600/$ in November.

According to the report, secondary market activity was dominated by FX and money market transactions, which together accounted for 75.74 percent of the total secondary market revenue in October 2024.

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Month over month, the total secondary market turnover reported on the FMDQ Exchange in October 2024 increased by 14.54 percent (or N5.23 trillion) to N41.23 trillion, which is 90.0% more than the October 2023 statistics.

In October 2024, the total spot market turnover for all products sold in the secondary market was N36.75 trillion, which was 9.40 percent (N3.16 trillion) more than the September 2024 numbers.

The FX, Money Market, and Fixed Income turnover increased by 8.49 percent (N1.28 trillion), 10.76 percent (N1.01 trillion), and 9.50 percent (N0.87 trillion) correspondingly, driving the month-over-month gain.

Charles Abuede, a financial analyst opined that the onus lies on the monetary and fiscal authorities to put in place friendly policies to aid the management of the fx market.

He noted,

"If Nigeria can address insecurity and terrorism concerns, oil theft and pipeline vandalism, we can begin to see an increase in our crude oil production to above 2mbpd or even close to 2.5mbpd to aid the increase in fx receipt."

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New report predicts exchange rate for naira

Legit.ng earlier reported that high demand for foreign exchange during Christmas will worsen the naira’s depreciation.

This is according to a projection by Meristem Securities Limited in its Inflation Report released on Tuesday, November 19, 2024.

In the report, Meristem expressed worry that the forex demand during Christmas would exacerbate the naira’s woes before the inflation rate.

Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng