Nigeria: Forex - Turnover in Nafem Rises 63 Percent to $5.4bn

5 November 2024
Vanguard (Lagos)
By Elizabeth Adegbesan

·As naira depreciates across all market segments

The volume of dollar traded (turnover) in the Nigerian Foreign Exchange Market, NAFEM, rose Month-on-Month (MoM) by 74 percent to $5.4 billion in October from $3.31 billion in September.

Vanguard findings from the transactions details of the foreign exchange market in the records of the FMDQ Plc, hosting the market platform, showed that turnover stood at $12.64 billion in the first quarter of 2024 (Q1'24) and fell quarter-on-quarter (QoQ) by 19 percent to $10.24 billion in the second quarter of 2024 (Q2'24).

In Q3'24 turnover grew by 6.4 percent to $10.9 billion.

Naira falls across all FX markets

Meanwhile, the naira depreciated in the official and parallel market segments in October.

The naira depreciated by N133.45 or 8.6 percent to N1,675.49 per dollar in NAFEM in October ending from N1,541.94 per dollar traded in September ending.

Similarly, the naira depreciated by N25 or 98 percent in the parallel market.

Vanguard findings from black market traders showed that the exchange rate for the market rose to N1,730 per dollar at the end of October from N1,705 per dollar in September ending.

Consequently, the margin between the parallel market rate and NAFEM rate narrowed to N54.61 per dollar in October from N163.06 per dollar in September.

However, analysts at Cowry Asset Management PLC have projected that the performance of the exchange rate in Q4'24 depends on the interplay between demand for foreign exchange and the supply facilitated by the Central Bank of Nigeria, CBN.

"Barring any major market distortion, we expect the exchange rate to trade within the current band of N1,500 per dollar and N1700 per dollar as CBN intensify its intervention in the market.

"The performance of the Naira in the Q4 of 2024 will largely depend on the interplay between demand for FX and the supply facilitated by the CBN. Positive catalysts, such as improved oil production could bolster the Naira's value.

"Also, as the festive season approaches, an increase in forex inflows is expected. It should be noted that the season import orders for the year is has passed hence we expect some moderation in demand".

Read the original article on Vanguard.

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