Naira Appreciates To 1,339.33/$ On Official-Market As Turnover Drops

Naira Appreciates To 1,339.33/$ On Official-Market As Turnover Drops

The naira appreciated to 1,339.33 per dollar at the close of trading on the official window on Monday, marking a 9.68 per cent gain from Friday’s rate of 1,482.81 per dollar.

According to FMDQ data, which tracks the Nigerian Autonomous Foreign Exchange Market, the daily turnover dropped significantly to $180.80 million from $556.25 million on Friday, indicating a 67.50 per cent decline.

On Monday, the naira traded at an intraday high of N1,501 and an intraday low of N1,310 to the dollar on the official market. However, at the black market, the naira traded at N1,520, showing a 1.32 per cent depreciation from Friday’s rate of N1,500.

The local currency ended the previous week marginally strong after a period of weakening. This stabilization was described by the Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, as a result of seasonal fluctuations. At the post-Monetary Policy Committee meeting press briefing last Tuesday in Abuja, Cardoso stated, “Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system.”

In addition, the demand for foreign exchange by individuals and companies for importation and other forex-related activities fell by 42 per cent year-on-year, according to the latest CBN data. An analysis of the total sectoral utilisation of foreign exchange revealed that 19 sectors and services received $21.12 billion in forex allocation in 2023, which is a 41.9 per cent or $8.87 billion reduction from the $29.98 billion disbursed in 2022.

Forex allocation refers to the process through which the CBN distributes foreign exchange to various sectors of the economy, including individuals, businesses, and government agencies, based on certain criteria and priorities.

In June 2023, the CBN adopted a floating exchange rate system for the naira, unifying all forex market segments. This policy change led to a notable depreciation of the domestic currency against the US dollar and other global currencies.

Published By: Destiny.Jnr