On Friday, Dollar sales at the Nigeria Autonomous Foreign Exchange Market (NAFEM) took a steep nosedive, plummeting by $252 million to $84.1 million compared to the previous day’s transactions, representing a 74 percent drop.
Concurrently, the naira saw a depreciation, hitting N1,537/$, down from N1,498/$ the day before, according to data from FMDQ Security Exchange.
“The significant drop in dollar sales coupled with the depreciation of the naira reflects the current challenges in the forex market,” stated a currency dealer.
Throughout the week, the forex supply fluctuated, starting low at $116.11 million on Monday, reaching a peak of $381.92 million on Tuesday, and then plummeting to $117.87 million on Wednesday, before rising again to $336.11 million on Thursday.
Market analysts attribute the depreciation of the naira to robust demand for dollars from speculators and individuals traveling for various purposes such as business, tourism, education, and healthcare.
“It’s evident that the demand for the greenback remains robust, suggesting that the challenges in the forex market might persist,” commented an expert.
The Central Bank of Nigeria (CBN) has been implementing various measures to address these challenges. In response to the widening gap between official and parallel market rates, the CBN issued directives to curb round-tripping activities and ensure compliance with forex regulations.
Among these measures, the CBN mandated Deposit Money Banks (DMBs) to sell excess dollar stock and warned against hoarding foreign currencies for profit.
Additionally, the CBN instructed International Oil Companies (IOCs) to stagger repatriation of revenue and revised guidelines to prevent under-invoicing of exports and over-invoicing of imports.
“While the CBN’s interventions aim to stabilize the forex market, challenges persist, especially with the widening gap between official and parallel market rates,” highlighted an economist.
In response to the CBN’s directives, banking institutions and International Money Transfer Operators (IMTOs) have initiated operational adjustments to comply with the revised remittance framework.
As stakeholders continue to grapple with the complexities of the forex market, experts emphasize the importance of sustained efforts to address underlying issues and ensure stability in Nigeria’s currency market.