By Milcah Tanimu
February 7, 2024
In recent developments on the official Nigeria Autonomous Foreign Exchange Market, foreign exchange transactions have surged to $584 million, a notable increase from the previous daily transaction of $440 million, as reported by data on the FMDQ Exchange this Tuesday.
Simultaneously, the national currency faced a decline against the United States dollar on the official market, concluding at N1433 per dollar, in contrast to the N1419 per dollar recorded on Monday.
According to data from FMDQ Security Exchange, the forex turnover rose to $584.53 million on Tuesday from $440.13 million on Monday, indicating a substantial increase of $144.4 million or 32.8 percent.
This boost in liquidity is attributed to efforts by the Central Bank of Nigeria (CBN) to stabilize the foreign exchange rate. Notably, apart from commercial banks, entities such as the Central Bank of Nigeria, oil firms, and multinationals are also actively involved in selling dollars on the Nigerian Autonomous Foreign Exchange Market.
In response to the growing disparity between parallel and official exchange rates, the CBN recently issued new circulars and guidelines aimed at enhancing liquidity. In a significant directive titled “Harmonisation of Reporting Requirements on Foreign CurrNaira Weakens as Official Market Records $584 Million in Forex Transactions
By Milcah Tanimu
February 7, 2024
In recent developments on the official Nigeria Autonomous Foreign Exchange Market, foreign exchange transactions have surged to $584 million, a notable increase from the previous daily transaction of $440 million, as reported by data on the FMDQ Exchange this Tuesday.
Simultaneously, the national currency faced a decline against the United States dollar on the official market, concluding at N1433 per dollar, in contrast to the N1419 per dollar recorded on Monday.
According to data from FMDQ Security Exchange, the forex turnover rose to $584.53 million on Tuesday from $440.13 million on Monday, indicating a substantial increase of $144.4 million or 32.8 percent.
This boost in liquidity is attributed to efforts by the Central Bank of Nigeria (CBN) to stabilize the foreign exchange rate. Notably, apart from commercial banks, entities such as the Central Bank of Nigeria, oil firms, and multinationals are also actively involved in selling dollars on the Nigerian Autonomous Foreign Exchange Market.
In response to the growing disparity between parallel and official exchange rates, the CBN recently issued new circulars and guidelines aimed at enhancing liquidity. In a significant directive titled “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks,” the CBN expressed concerns about banks holding large foreign currency positions, citing potential exposure to foreign exchange and other risks.
The circular mandates that banks’ Net Open Position (NOP) should not exceed 20 percent short or 0 percent long of the bank’s shareholders’ funds. Those exceeding this limit were given a deadline of February 1, 2024, to make necessary adjustments.
Following the CBN’s directives, the national currency experienced three consecutive gains at the official market. However, after Tuesday’s trading, the naira saw a marginal depreciation of 0.85 percent, with the dollar quoted at N1,433.89, compared to N1,421.70 on Monday at the NAFEM market.ency Exposures of Banks,” the CBN expressed concerns about banks holding large foreign currency positions, citing potential exposure to foreign exchange and other risks.
The circular mandates that banks’ Net Open Position (NOP) should not exceed 20 percent short or 0 percent long of the bank’s shareholders’ funds. Those exceeding this limit were given a deadline of February 1, 2024, to make necessary adjustments.
Following the CBN’s directives, the national currency experienced three consecutive gains at the official market. However, after Tuesday’s trading, the naira saw a marginal depreciation of 0.85 percent, with the dollar quoted at N1,433.89, compared to N1,421.70 on Monday at the NAFEM market.