 |
| FX Turnover Reaches $7.4bn in July – Report |
In July, the foreign exchange turnover at the official trading window for the Nigerian currency stood at N11.48 trillion ($7.39 billion), surpassing the N10.01 trillion traded in the previous month.
This information was revealed in the financial markets monthly report for July, published by the FMDQ, which oversees the official foreign exchange trading platform.
In dollar terms, the FX market turnover in July saw a 10.02% ($0.67 billion) month-on-month increase from $6.72 billion in June.
Additionally, the Naira depreciated against the dollar, with the spot exchange rate rising by 4.88% (N72.58) to an average of $/1,560.32 in July, up from $/1,487.74 in June.
Exchange rate volatility also increased in July, with the Naira trading between $/1,500.32 and $/1,621.12, compared to $/1,473.66 and $/1,510.10 in June 2024.
By the end of the week, the Naira appreciated by 62 basis points to N1,570.14/$, closing the week at the Nigerian Autonomous Foreign Exchange Market (NAFEM). The turnover was $120.81 million, with an intra-day high and low of 1606/$ and 1496/$, respectively.
FX turnover represents the total value of all transactions in the foreign exchange market, reflecting increased trading activities during the review period.
A recent report from the Central Bank of Nigeria indicated that the average exchange rate of the Naira against the dollar at the NAFEM fell by 35.53% to $/1,304.72 in the first quarter of 2024, compared to $/841.15 in the last quarter of 2023.
Businesses surveyed expect the Naira to continue depreciating over the next three months, starting in July, but anticipate appreciation after six months.
The report stated, “Respondent firms expect the Naira to depreciate in the current month, next month, and the next three months but appreciate in the next six months, with indices at -22.6 points, -16.5 points, -4.8 points, and 13.7 points, respectively.
“They also expect borrowing rates to rise, with confidence indices at 15.0, 14.3, 18.3, and 17.4 points for the respective periods. Additionally, they perceive the current inflation rate of 34.19% as too high, with this sentiment strongest among large firms at 72.8 points.”
Furthermore, the CBN announced a surge in remittance inflows, reaching $553 million in July 2024, a 130.00% year-on-year increase compared to July 2023.
The apex bank attributed this growth to recent policy initiatives aimed at boosting liquidity in Nigeria’s foreign exchange market, including issuing licenses to new international money transfer operators and adopting a willing buyer-willing seller model, ensuring timely access to Naira liquidity for IMTOs.
Analysts at Meristem Research expressed optimism that remittance inflows would “continue their upward trajectory, supported by these policies and additional strategic efforts to enhance stability in the FX market.”
Source News
