Dollar Supply in Foreign Exchange Market Grows 226% as Naira Trades at New Rates in Official Market

• The Nigerian foreign exchange market experienced increased forex turnover of about 226%
• The development comes as the Central Bank of Nigeria (CBN) said Nigeria’s FX reserves hit a three-year high of $40.88 billion
• Also, the apex bank asked Nigerians to report banks that fail to make cash available to customers in ATMs and other channels

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

The Nigerian Autonomous Foreign Exchange Market (NAFEM) daily turnover rose 226% in the first six months of 2024 relative to the previous year, demonstrating the success of reforms.

The development comes as the Central Bank of Nigeria (CBN) asked customers to report cash withdrawal challenges in any bank beginning December 1, 2024, amid an ongoing cash crunch.

FX market experiences improved dollar supply

The governor of CBN, Olayemi Cardoso, stressed penalties for failing to ensure cash availability, highlighting a 72% increase in foreign portfolio inflows and a growth in forex reserves from $32 billion to over $40 billion FX reserves, the highest in three years.

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The improved FX market positively affected NAFEM's daily turnover, as inflows rose 226% in the first six months of this year.

The move comes as the apex bank said it will revive the eNaira to boost broader payments.

Cardoso disclosed that banks will face severe consequences if they fail to provide cash at the ATMs.

He said the CBN is also worried about delays in settling transactions in the financial system. He added that there will be strict penalties for banks not complying with the cash availability policy and prompt transaction payment.

FX reserves and foreign portfolio increase

Foreign portfolio inflows rose 72% during this period, while FX reserves increased.

The reserve increase represents eight months’ imports and is the highest reserve level in almost three years.

According to reports, the FX market supported $9 billion in capital outflows over the past year as investors freely repatriated capital and dividends without waiting months.

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Naira gains in all markets as FX supply exceeds half a billion dollar in official window in one day

The naira experienced mixed movements in November

This development comes as the foreign exchange market experienced mixed reactions in the last week of November, with the dollar trading at various rates.

Data from the FMDQ Exchange shows that the naira depreciated on Friday, November 29, 2024.

The Nigerian currency depreciated 1.69% in the official window on Friday, trading at N1,672.69, down from the previous rate of N1,656 per dollar.

Naira gains in all markets as FX supply exceeds half a billion dollar

Legit.ng earlier reported that the naira appreciated in the official window by 0.97% on Thursday, November 28, 2024, as traders quoted the dollar at N1,644.86 relative to N1,660.83 traded on Wednesday, November 27, 2024.

The official foreign exchange market experienced an increase in FX supply, rising by 66.24% to $560.34 million on Thursday, November 28, 2024, as against the $337.07 million recorded the previous day.

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Data from the FMDQ Exchange shows that willing buyers and willing sellers quoted the dollar at a high of N1,701 per dollar and a low of N1,557, showing a spot rate difference of N155.

Source: Legit.ng