July 22, 2024
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The exchange rate between the naira and the dollar fell to a six-week low on Monday, closing at N1,490.2/$1, just N10 shy of hitting N1,500/$1.

This is according to official data from the FMDQ, where currencies are traded officially. The exchange rate has remained stable throughout June, oscillating between N1,470 and N1,480/$1.

The latest slide closer to N1,500 will send jitters to currency watchers, as it represents a psychological ceiling that, when breached, might be perceived as a new wave of depreciation.

According to close-of-day data from the FMDQ, the exchange rate closed at N1,490.2/$1 at the official market on June 24, 2024. This is the lowest since May 17, 2024, when it closed at N1,497.33/$1.

Total forex turnover for the day closed at $152 million, bringing the cumulative forex traded month-to-date to around $2.54 billion. This compares to $3.3 billion at this time in May.

Meanwhile, the intra-day high indicates that the global reserve currency exchanged for as high as N1,505, while it sold for as low as N1,411 on the day.

The intra-day high has traded above N1,500 on average this month, as hawkish traders continued to sell closer to the black market price.

In the parallel market, where the exchange rate is sold unofficially, the dollar sold for around N1,495, while the UK pound sold for N1,895-N1,900. Nigerians still rely on the parallel market to source forex for travel allowances.

Currency weakness could be imminent as we approach the summer holidays when Nigerians mostly fly out of the country for vacations.

Just last week, Nigeria’s foreign exchange (FX) reserves surged to their highest level since March 28, 2024, marking a significant financial milestone that coincides with the longest period of stable exchange rate seen in over a year.

According to the latest data published by the Central Bank of Nigeria (CBN), the reserves now stand at $33.58 billion as of June 19, 2024.

This achievement represents a notable recovery since the end of March 2024 when it was as high as $33.83 billion before a period of decline set in.

The rise in FX reserves comes after three months of noticeable fluctuations when it plunged to a low of $32.11 billion on April 19, 2024, sparking concerns about the nation’s financial stability.

Meanwhile, the exchange rate for import duties collection by the Nigeria Customs Service (NCS) has stayed at N1474/$ in the last three weeks consecutively- the longest duration since January.

This is as the naira stabilises around N1450/$ to N1490 to the USD in the past few weeks following months of volatility since February 2024.

 

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