Nigerian FX Market Witnesses 56% Plunge in Transactions Amidst Rising Dollar Demand

The Nigerian Autonomous Foreign Exchange Market (NAFEM) saw a dramatic 56% decline in transaction value, plunging from $465.29 million on Tuesday to $203.93 million on Wednesday, according to data obtained from FMDQ Exchange.

This drop comes amidst a backdrop of increased transactional activity fueled by recent circulars from the Central Bank of Nigeria (CBN).

Speaking to The Punch, Abdulahi Taura, a Bureau De Change operator, remarked, “The dollar has increased to N1,480. People are still demanding it and that’s why it’s increasing.”

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His sentiments were echoed by Ibrahim Yahu, another BDC operator, who noted that the greenback was sold at the closing rate of N1,482, attributing the rise to consistent demand.

The decline in FX transactions follows a series of CBN circulars aimed at enhancing transparency and liquidity in the market, including directives compelling banks to offload excess dollar holdings and report accurate trading data.

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Despite these efforts, the naira depreciated by 1.4% against the dollar at the parallel market, trading at N1,480/$, down from N1,460/$ on Wednesday.

Meanwhile, the official market witnessed a similar trend, with the naira weakening further against the US dollar, closing at N1479.47/dollar compared to N1434.53/dollar recorded the previous day. This downward spiral in the value of the naira reflects growing concerns over forex liquidity and stability.

Forex turnover has taken a downward trend over the last two days, with transactions on the official NAFEM plummeting from $584 million on Monday to $203.93 million on Wednesday.

The current state of the market underscores the challenges facing Nigeria’s foreign exchange regime and the urgent need for sustainable solutions to stabilize the currency and bolster investor confidence

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