NAIRA WEAKENS AT OFFICIAL MARKET, BANKS SELL $584M

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Data published on the FMDQ Exchange on Tuesday indicates that the value of foreign exchange transactions registered on the official Nigerian Autonomous Foreign Exchange Market has increased to $584 million.

Compared to the $440 million daily transaction that was previously reported on the platform, this is a huge rise.

The event transpired on Tuesday at the official market, when the value of the national currency declined in relation to the US dollar.

It closed at N1433/dollar, down from Monday’s recorded N1419/dollar.

Meanwhile, data from FMDQ Security Exchange shows that the FX turnover rose by $144.4 million, or 32.8 percent, from $440.13 million on Monday to $584.53 million on Tuesday.

Improved liquidity is the result of actions taken by the Central Bank of Nigeria to stabilize the foreign exchange rate.

On the other hand, dollars are sold at the Nigerian Autonomous Foreign Exchange Market by multinational corporations, the Central Bank of Nigeria, and commercial banks.

Last week, the apex bank rolled out new circulars and guidelines to boost liquidity and narrow the gap between the parallel and official rates of the foreign exchange market. In its most significant foreign exchange guideline, last week, the CBN ordered banks to adjust their FX exposures.

In its circular titled, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, the apex bank expressed worry over the growing trend of banks holding large foreign currency positions.

It said, “The Central Bank of Nigeria has noted with concern the growth in foreign currency exposures of banks through their Net Open Position. This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange and other risks.”

The CBN ordered that, going ahead, banks’ net operating profit (NOP) may not be greater than 20% short or 0% long of the money owned by the bank’s shareholders. It set a deadline of February 1, 2024 for individuals who went above the limit.

Following the modifications, the national currency increased three times on the official market in response.

Last week, on Wednesday, Thursday, and Friday, the naira ended at N1,455.59/$, N1,445/$, and N1435.53/$, respectively.

Following Tuesday’s trade, the value of the naira slightly decreased by 0.85% as the dollar was quoted at N1,433.89, which was higher than the N1,421.70 quoted at the NAFEM market on Monday.

However, a Bureau De Change Operator, speaking to our correspondent said the dollar was traded between N1,480 and N1,485 to the dollar at the parallel market.

He stated, “Today’s market was not too good, but the dollar was sold between the rates of N1,480 and N1,485 to the dollar.

Abubakar Taura said, “Dollar increased to N1,460 today, and that is the last price.”

However, another BDC, Suraju, complained of the exorbitant price of the dollar, adding that he didn’t trade with the greenback.

He said, “I don’t know the price for today because I didn’t sell at the market. The price for the dollar is too much and I can’t afford it.”

However, economic managers have said the naira will firm up in both markets in the coming days.