The naira saw a notable strengthening, reaching 1,339.33 per dollar by the close of trading on the official window this Monday, marking a 9.68% increase from Friday’s rate of 1,482.81 per dollar. Data from FMDQ, the Nigerian Autonomous Foreign Exchange Market repository, indicates a significant decrease in daily turnover to $180.80 million from $556.25 million on Friday, reflecting a 67.50% decline.
In the official market, the naira recorded an intraday high of N1,501 and an intraday low of N1,310 against the dollar on Monday. However, on the black market, the naira experienced a 1.32% depreciation, trading at N1,520 compared to N1,500 on Friday.
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The recent volatility in the foreign exchange market, as observed by the Central Bank of Nigeria Governor, Olayemi Cardoso, is attributed to seasonal demand, reflecting the dynamics of a freely functioning market system. Notably, the demand for foreign exchange for importation and related activities decreased by 42% year-on-year, according to the latest CBN data.
Analysis of sectoral utilization of foreign exchange indicates a $8.87 billion reduction in forex allocation in 2023 compared to 2022, with 19 sectors and services receiving $21.12 billion. This reduction follows the CBN’s adoption of a floating exchange rate system in June 2023, leading to a notable depreciation of the naira against major global currencies.
