MARY EYO
The naira appreciated to 1,339.33/$ at the close of trading on the official window on Monday, marking a 9.68% gain over Friday’s rate of 1,482.81/$.
This significant improvement was reported by FMDQ, which houses the Nigerian Autonomous Foreign Exchange Market.
However, the daily turnover saw a substantial decline, dropping to $180.80 million from $556.25 million on Friday, indicating a 67.50% decrease.
Throughout Monday, the naira traded at an intraday high of N1,501 and an intraday low of N1,310 to the dollar.
In contrast, the black market saw the naira trading at N1,520, a 1.32% depreciation from N1,500 exchanged on Friday.
The local currency had closed flat against the dollar on Friday, ending the week slightly stronger at the official foreign exchange market after weeks of weakening.
Central Bank of Nigeria Governor, Olayemi Cardoso, addressed this at a post-Monetary Policy Committee meeting press briefing last Tuesday in Abuja.
He described the situation as a seasonal fluctuation.
“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 in a freely functioning market system,” Cardoso stated.
Additionally, the demand for foreign exchange by individuals and companies for importation and other forex-related activities fell by 42% year-on-year, according to the latest data from the CBN.
An analysis of the total sectoral utilization of foreign exchange revealed that 19 sectors and services received $21.12 billion in forex allocation in 2023, a 41.9% or $8.87 billion reduction from the $29.98 billion disbursed to industry players in 2022, based on the quarterly statistics report by the CBN.
Forex allocation is the process through which the CBN distributes foreign exchange to various sectors of the economy, including individuals, businesses, and government agencies, based on specific criteria and priorities.
In June 2023, the CBN adopted a floating exchange rate system for the naira, unifying all forex market segments.
This move led to a notable depreciation of the domestic currency against the US dollar and other global currencies.