FX Turnover Was $7.4 Billion in July – Report.
The foreign exchange turnover for July reached N11.48tn ($7.39bn) at the official trading window for the Nigerian currency, marking an increase from the N10.01tn traded in June. This information was revealed in the financial markets monthly report for July published by the FMDQ, which operates the official foreign exchange trading platform.
In dollar terms, the FX market turnover in July saw a month-on-month increase of 10.02% ($0.67bn), rising from $6.72bn in the previous month. Meanwhile, the naira experienced depreciation against the dollar, with the spot exchange rate climbing by 4.88% (N72.58) to an average of $/1,560.32 in July, compared to $/1,487.74 in June.
Additionally, exchange rate volatility heightened in July, with the local currency trading between $/1,500.32 and $/1,621.12, in contrast to the range of $/1,473.66 to $/1,510.10 observed in June 2024. By the end of the week, the Naira appreciated by 62 basis points to N1570.14/$, concluding the week at the NAFEM. The turnover for that period was $120.81m, with intra-day highs and lows of 1606/$ and 1496/$, respectively.
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FX turnover represents the total value of all transactions conducted in the foreign exchange market during January, highlighting increased trading activity in the forex market during the reviewed period. Recent data from the Central Bank of Nigeria indicated that the average exchange rate of the naira against the dollar at the Nigerian Autonomous Foreign Exchange Market fell by 35.53% to $/1,304.72 in the first quarter of 2024, down from $/841.15 in the last quarter of 2023.
Several businesses surveyed expect the naira to continue its depreciation over the next three months, starting in July. However, they anticipate that the currency will begin to appreciate after a six-month period. The report indicated that respondent firms foresee the naira depreciating in the current month, next month, and the subsequent three months before experiencing an appreciation thereafter.
This outlook reflects concerns among businesses regarding the stability of the naira and its impact on trade and investment. The fluctuations in the exchange rate and increased volatility may influence decision-making for companies operating in the Nigerian market.
In conclusion, while the foreign exchange turnover has shown positive growth, the depreciation of the naira and increased volatility present challenges for businesses and the broader economy. Stakeholders will be closely monitoring these trends as they navigate the complexities of the foreign exchange market in the coming months.
