Decline in FX Transactions as Naira Weakens Against Dollar

In recent days, the official Nigerian Autonomous Foreign Exchange Market has witnessed a significant downturn, with the total value of transactions plummeting from $584 million on Monday to $203.93 million on Wednesday, as reported by data from FMDQ Exchange.

This notable 56% drop in transaction value on the FMDQ platform, which meticulously records volume and value of transactions on NAFEM, follows a preceding period of consistent increase attributed to circulars issued by the Central Bank of Nigeria (CBN).

Last week, the CBN implemented measures compelling banks to offload excess dollar holdings and issued directives urging banks and FX dealers to provide accurate and transparent FX trading data. The impact of these directives is now evident in the recent decline in foreign exchange transactions.

Simultaneously, the Naira experienced a 1.4% depreciation against the dollar at the parallel market on Thursday, reaching N1,480/$, down from N1,460/$ quoted the previous day. Bureau De Change operators emphasized a continuous increase in the exchange rate throughout the week due to persistent demand for the US dollar.

Abdulahi Taura, a BDC operator, highlighted, “The dollar has increased to N1,480. People are still demanding it, and that’s why it’s increasing.” Another operator, Ibrahim Yahu, mentioned that the greenback was sold at the closing rate of N1,482, attributing the rise to a consistent thirst for the dollar.

At the official market, the naira further weakened against the United States dollar, closing at N1479.47/dollar compared to N1434.53/dollar recorded on Wednesday, as per data from the FMDQ Exchange website.

As forex turnover takes a downward trend in the last two days, industry experts express concerns about the continued demand for the dollar and its impact on the stability of the Nigerian currency.