Forex turnover has grew by 148.95 per cent to $242.60 million as the Naira gained marginally against the dollar on Wednesday, 10th January 2024 at the official market to remain above the N1,000/$ threshold.
The domestic currency appreciated by 0.66 per cent to close at N1082.32 to a dollar at the close of business, data from the NAFEM where forex is officially traded, showed.
This represents an N7.19 gain or a 0.66 per cent increase in the local currency compared to the N1089.51 close the previous day.
The intraday high recorded was N1270.65/$1, while the intraday low was N700/$1, representing a wide spread of N570/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $242.60 million, representing a 148.95% increase compared to the previous day.
Similarly, the naira gained marginally at the parallel forex market where forex is sold unofficially, the exchange rate quoted at N1240/$1, representing a 0.40% increase over what it closed the previous day, while peer-to-peer traders quoted around N1252.60/$1.
The former President and Chairman governing council of the Chartered Institute of Stockbrokers (CIS) and the Managing Director of Arthur Steven Asset Management Limited, Olatunde Amolegbe who spoke on the development in the market, said for the exchange rate to be stable, market and participants confidence is key.
“Confidence is what makes foreigners want to come to invest in your country and make locals want to keep their investments here.
“In the absence of these dynamics, demand will naturally outstrip supply and you see the sort of instability we are experiencing now.
“I think the decision to clear FX commitment backs will be positive for market confidence, but the desired impact might manifest in the medium term rather than in the short run.
“I also think the efforts at using monetary policy tools to reduce system liquidity could ultimately reduce currency speculation but again it’s not a silver bullet.
“Deliberate efforts need to intensify at effecting structural changes that will encourage import substitution such as improved security, better infrastructure increased foreign direct investments, and encouraging local production,” he said.
Managing Director/CEO, of Financial Derivatives Company Limited, Bismarck Rewane had said in a report that the naira is expected to remain volatile on lingering forex supply concerns.
The dollar dearth means speculative buying is likely to continue, with an increasing number of market participants taking long positions on the dollar while shorting the naira.
