FILE PHOTO: A man counts U.S. dollar banknotes next to Lebanese pounds at a currency exchange shop in Beirut, Lebanon April 24, 2020. REUTERS/Mohamed Azakir/File Photo
Forex turnover rose by 460.52% to $147.81 as the Nigerian naira tumbled against the dollar on Tuesday, January 16th, 2024, in both the official and black markets.
The domestic currency depreciated 4.72% to close at N878.57 to a dollar at the close of business, based on data from NAFEM where forex is officially traded.
This represents an N39.62 loss or a 4.72% decrease in the local currency compared to the N838.95 closed the previous day.
The intraday high recorded was N1299.50/$1, while the intraday low was N720.50/$1, representing a wide spread of N579/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $147.81 million, representing a 460.52% increase compared to the previous day.
Similarly, the naira depreciated at the parallel forex market where forex is sold unofficially, the exchange rate quoted at N1280/$1, representing a 1.17% decrease over what it closed the previous day, while peer-to-peer traders quoted around N1325.64/$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 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.
