The Nigerian Autonomous Foreign Exchange Market (NAFEM) reported a notable increase in foreign exchange turnover, reaching N15.74 trillion ($9.90 billion) in August 2024. This uptick follows the Central Bank of Nigeria’s (CBN) disclosure of foreign inflows of $585 million for the same month.
On the official market, the naira depreciated to N1,658 against the U.S. dollar, a slight drop from N1,659 on Monday, while black market rates soared to N1,670.
According to the CBN, the substantial turnover reflects a month-on-month rise of 33.88%, contributing an additional N2.51 trillion from July’s turnover of N13.23 trillion ($7.39 billion). This surge indicates heightened trading activity and investor engagement within the foreign exchange market.
Key players, including commercial banks, the CBN, and international oil companies, are primary sellers of forex on NAFEM. The FMDQ’s financial markets report noted that the increase in turnover was driven by transactions involving Treasury bills, Open Market Operations (OMO) Bills, and Federal Government Bonds, although other bond transactions saw an 18.43% month-on-month decrease.
Despite this increase, the naira continues to experience volatility amid ongoing economic pressures. The report highlighted that the average spot exchange rate rose by 1.68% to N1,586.56 in August, with fluctuations ranging from N1,543.84 to N1,617.08.
The CBN auctioned $876.26 million to end users through 26 commercial banks last month in an effort to stabilize the naira. This initiative temporarily appreciated the naira to N1,596.52/$ from N1,601/$, providing critical support for businesses needing dollars for importing essential goods.
CBN Governor Olayemi Cardoso emphasized that the naira’s value cannot improve without addressing fundamental forex issues. He noted an increase in Nigeria’s external reserves, which reached $39.07 billion as of September 19, 2024, marking a 17.4% increase from the previous year.
Cardoso stressed the need for diversifying the economy and boosting non-oil exports to enhance the naira’s value, stating, “Without the fundamentals in the right position, you will continue to sub-optimize.”
