By Milcah Tanimu
Despite Central Bank of Nigeria (CBN) initiatives aimed at bolstering forex supply, forex turnover plunged by 56.17% to $203 on Wednesday, February 7th, 2024, at the official market. While the Nigerian naira saw a marginal uptick against the dollar in official trading, the exchange rate worsened in the black market.
Official data revealed the naira closed at N1418 to a dollar, marking a 1.12% depreciation compared to the previous day’s close. Throughout the trading day, the exchange rate fluctuated between an intraday high of N1,510/$1 and an intraday low of N896.28/$1, indicating a significant spread of N613.72/$1. Notably, this marks the seventh consecutive day with an intraday high above N1,500/$1.
The Nigerian Autonomous Foreign Exchange Market (NAFEM) window reported a forex turnover of $203.93 million by the end of trading, representing a staggering 56.17% decrease from the previous day.
Conversely, in the unofficial parallel forex market, the naira experienced a slight depreciation, with the exchange rate quoted at N1465/$1, reflecting a 1.02% decrease from the previous day. Peer-to-peer traders quoted a slightly higher rate at around N1482.50/$1.
Addressing the House of Representatives, CBN Governor Mr. Cardoso highlighted positive outcomes from recent reforms, including a significant increase in dollar liquidity, with transactions surpassing $800 million.
The recent depreciation trend of the naira against the dollar began on January 26th, following measures by the central bank to align official market rates closer to those of the parallel market. Despite reaching an intraday high of N1,526/$1, the official closing rate on the NAFEM window was N1,419.86/$.
To address the scarcity of dollars in the domestic market, the CBN has implemented several reforms, including the clearance of forex obligations, settling $2.3 billion out of $2.2 billion remaining. Additionally, plans are underway to establish a singular foreign currency (FCY) gateway bank, aiming to centralize correspondent banking activities and incentivize individuals holding foreign currencies outside the formal banking system.