On Wednesday, the naira hit its lowest point against the dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window. This marked a significant moment in the FX market as it reflected the ongoing pressures on the Nigerian currency.
According to data from the FMDQ Securities Exchange, the naira traded at N1,561.98/$1 on July 10, 2024, which represented a 2% decline from the N1,532.58/$1 rate observed on the previous day. This consistent depreciation has been a cause for concern among market watchers and economic stakeholders.
This is the third consecutive depreciation, despite stronger external reserves and rising foreign exchange (FX) turnover, and the lowest level since March 18, 2024, when it was N1,597.25/$1. The naira is approaching N1,600 less than three weeks after surpassing the N1,500 mark, signaling a potential ongoing downward trend.
Wednesday’s trading dynamics highlight the FX market’s volatility. The exchange rate peaked at N1,585/$1 during intra-day trading, indicating periods of high buying pressure. In contrast, the intra-day low dropped to N1,475/$1, showcasing the wide range of trading values within the day. These sharp fluctuations within a single day suggest significant market uncertainty and instability, reflecting the complex interplay of supply and demand forces.
Despite the naira’s three-day decline against the dollar, FX turnover on the official market has consistently increased. On Wednesday, FX turnover surged by 25.78% to $236.7 million from $188.19 million the previous day, highlighting an increase in market activity and participation.
The increase was even more pronounced on Tuesday, with a 41.01% rise, and on Monday, with a 14.19% rise. Over the week, FX turnover has increased by 77.36% from Monday to Friday, indicating a robust trading environment despite the depreciation of the naira.
