Despite a significant increase in the supply of dollars at Nigeria’s Autonomous Foreign Exchange Market (NAFEM), the value of the naira could not strengthen. The daily foreign exchange market turnover rose by 46.69%, reaching $123.25 million on Monday. However, the naira depreciated by 1.96%, with the dollar quoted at N795.41 compared to N780.14 on Friday. The parallel market, or black market, also saw the naira weakening, with the dollar sold for N1,130 during intraday trading on Monday, representing a 1.80% loss.
Key Points:
- Increase in Dollar Supply:
- The daily foreign exchange market turnover at NAFEM increased by 46.69% to $123.25 million on Monday from $84.02 million on Friday.
- Naira Depreciation:
- Despite the rise in dollar supply, the naira depreciated by 1.96%, with the dollar quoted at N795.41 on Monday, compared to N780.14 on Friday at NAFEM.
- Parallel Market Movement:
- The naira depreciated on the parallel market (black market) as well, with the dollar sold for N1,130 during intraday trading on Monday, reflecting a 1.80% loss compared to N1,110/$1 on Friday.
- Previous Naira Movement:
- The naira had strengthened on Thursday and Friday, moving from N1,140 on Wednesday to N1,110 on Friday on the parallel market.
- Renewed Demand Pressure:
- The naira’s depreciation on Monday was attributed to renewed demand pressure, despite the currency appreciating for two trading days previously.
- Spot Rates:
- The willing buyers and sellers quoted the dollar at a higher spot rate of N1,099 and a lower rate of N701/$1 at NAFEM.
- Market Dynamics:
- Despite increased dollar supply, the naira’s movements reflect the complex dynamics in Nigeria’s foreign exchange market, including demand pressures and other economic factors.
Conclusion:
The failure of the naira to gain strength despite a notable increase in dollar supply highlights the ongoing challenges in Nigeria’s foreign exchange market. The currency’s movement is influenced by factors such as demand pressure, market dynamics, and broader economic conditions. The parallel market’s fluctuations and intraday trading reflect the volatility and complexities faced by participants in the foreign exchange landscape.
