Naira-Dollar Notes
On Monday, the naira strengthened to 1,339.33 per dollar at the close of trading on the official market, marking a 9.68 percent increase from Friday’s rate of 1,482.81 per dollar.
FMDQ data revealed a significant drop in daily turnover in the Nigerian Autonomous Foreign Exchange Market, decreasing to $180.80 million from Friday’s $556.25 million, a decline of 67.50 percent.
On Monday, the naira reached an intraday high of N1,501 and a low of N1,310 to the dollar in the official market.
In the black market, it traded at N1,520, reflecting a 1.32 percent drop from Friday’s N1,500 rate.
On Friday, the Naira remained stable against the dollar, closing the week slightly stronger in the official foreign exchange market after a period of decline. Central Bank of Nigeria Governor, Olayemi Cardoso, attributed this to seasonal fluctuations during a press briefing following the Monetary Policy Committee meeting last Tuesday in Abuja.
“Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply freely functioning market system,” Cardoso said.
In contrast, the latest data from the CBN indicates a 42 percent year-on-year decrease in the demand for foreign exchange by individuals and companies engaged in importation and other forex-related activities.
Analysis of the total sectoral utilization of foreign exchange shows that 19 sectors and services received a total forex allocation of $21.12 billion in 2023.
However, this amount represented a 41.9 percent decrease, or $8.87 billion reduction, compared to the $29.98 billion disbursed to industry participants in 2022, according to the CBN’s quarterly statistics report.
Forex allocation is the process by which the CBN distributes foreign exchange to different sectors of the economy, including individuals, businesses, and government agencies, based on specific criteria and priorities.
In June 2023, the CBN implemented a floating exchange rate system for the naira, merging all forex market segments. This change resulted in a significant depreciation of the domestic currency against the US dollar and other major global currencies.
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