The naira appreciated to 1,339.33/$ at the close of trading on the official window on Monday, gaining 9.68 percent from Friday’s rate of 1,482.81/$.
According to data from FMDQ, which oversees the Nigerian Autonomous Foreign Exchange Market, daily turnover dropped significantly to $180.80 million from Friday’s $556.25 million, a 67.50 percent decline. On Monday, the naira traded at an intraday high of N1,501 and an intraday low of N1,310 to the dollar.
In the black market, the naira traded at N1,520, a 1.32 percent depreciation from Friday’s N1,500. The local currency closed flat against the dollar on Friday, ending the week marginally strong after weeks of weakening.
Central Bank of Nigeria Governor Olayemi Cardoso attributed this fluctuation to seasonal factors. “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,” Cardoso said at a press briefing following the Monetary Policy Committee meeting in Abuja.
Meanwhile, the demand for foreign exchange by individuals and companies for importation and other activities fell 42 percent year-on-year, according to the latest data from the CBN. An analysis of the total sectoral utilization of foreign exchange revealed that 19 sectors and services received $21.12 billion in forex allocation in 2023, a 41.9 percent reduction from the $29.98 billion disbursed in 2022.
In June 2023, the CBN adopted a floating exchange rate system for the naira, unifying all forex market segments. This move led to a significant depreciation of the domestic currency against the US dollar and other global currencies, underscoring the ongoing challenges in stabilizing the naira amidst fluctuating demand and supply dynamics.
