• Foreign exchange inflows in the official market dropped significantly by 16.5% in one week
• Weekly analysis shows that the FX market dropped to $1,087 million compared to the $1,302 million recorded the previous week
• Meanwhile, the naira strengthened on Monday, August 5, 2024, to trade at N1,607.15 per dollar

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

FX Spot and Derivatives markets’ turnover for the week ended August 2, 2024, stood at $1.087 million, representing a decline of 16.5% or $215.24 million from $1.302.57 million recorded on July 26, 2024.

Weekly analysis on the FMDQ Securities Exchange shows a decrease in total turnover, which was driven by the 16.8% decline in FX spot turnover. The total value was $1.087.72 million compared to the $1.302.57 million recorded in the week ended July 26, 2024, erasing the $3.61 million increase in FX derivatives turnover.

Naira depreciates in NAFEX in one week

FMDQ disclosed that the weekly increase in FX derivatives turnover was mainly driven by the $3.61 million increase in FX forwards turnover. At the same time, there was a consistent lack of activity in the exchange-traded FX Futures and Cleared Naira-Settke Non-Deliverable Forwards.

According to reports, within the period, the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) stood at N1,610.56 per dollar, compared to N1,584.4 million recorded in the week ended July 26, 2024.

Analysts believe that foreign exchange liquidity is expected to remain weak due to the Central Bank of Nigeria (CBN) 's weak interventions.

Codros Capital disclosed that heightened global interest rates and geopolitical uncertainties may weaken foreign inflows.

FX inflow declines in one week

FMDQ data shows that total inflows into the Nigerian foreign exchange market declined to a five-month low in July, decreasing by 4.4% monthly to $1.9 billion from $2.01 billion recorded in June.

The drop was due to a contraction in FX inflows. Collections from foreign sources dipped by 51.4% monthly to $243.3 million from $500.2 million due to weaker collections from portfolio investments of about 58.8% and others declining by negative 32.1% despite the rebound in foreign direct investment of 1.705.9.

Naira appreciates despite weak inflows

Meanwhile, inflows from local sources increased by 11.1% monthly to $1.68 billion in July from $1.51 billion, supported by larger inflows from the CBN, which spiked by 348.1% monthly, and inflows from individuals, which totalled 12.3%. Inflows from non-bank corporates and exporters segment recorded 6.9% and 4.5% declines.

The development comes amid the appreciation of the Nigerian currency, the naira, on Monday, August 5, 2024, to N1,607.15 from N1,617.81 per dollar recorded on Friday, August 2, 2024.

Traders quoted the dollar’s spot rate as a high of N1,620.50 per dollar and a low of N1,570, and FX turnover declined to $77.09 million.

Banks, traders crash dollar rate in official, black markets

Legit.ng earlier reported that the Nigerian currency, the naira, recorded an impressive performance against the US dollar for the first time in two weeks.

The naira appreciated against the dollar in the Nigerian foreign exchange market on Thursday, August 1, 2024, to trade at N1,570 per dollar, representing a 2.47% increase from the previous day’s gain of N1,698.73 per dollar.

The current performance of the naira is the first time since July 24, 2024, when the Central Bank of Nigeria sold Forex to 29 authorised dealers.

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

Source: Legit.ng

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