Dollar trading volume surged by 63% in the Nigerian Foreign Exchange Market (NAFEM) during October, with turnover reaching $5.4 billion compared to $3.31 billion in September. This uptick, recorded on the FMDQ platform, indicates heightened activity in the FX market amid ongoing fluctuations in the naira’s value.
Data from the market platform FMDQ Plc shows that dollar turnover hit $12.64 billion in the first quarter of 2024 but experienced a 19% decline to $10.24 billion in Q2. In the third quarter, trading volume rose slightly, recording a 6.4% increase to $10.9 billion.
Naira Continues to Fall Across FX Markets
Throughout October, the naira weakened in both the official NAFEM and the parallel (black) market segments. In NAFEM, the naira dropped by N133.45 (8.6%), ending the month at N1,675.49 per dollar, down from N1,541.94 in September. The parallel market also saw a decrease in the naira’s value, closing October at N1,730 per dollar, down from N1,705.
As a result, the price difference between the official and parallel markets narrowed significantly, with the gap closing to N54.61 per dollar in October, compared to a much wider N163.06 spread in September.
Future Projections and Market Drivers
Analysts at Cowry Asset Management PLC suggest that the naira’s performance in the last quarter of 2024 will depend on the balance between forex demand and supply, primarily influenced by the Central Bank of Nigeria’s (CBN) interventions. “We anticipate that the exchange rate will stay within the range of N1,500 to N1,700 per dollar, as the CBN continues to support the market,” analysts stated.
Further stabilization could arise from increased oil production, a factor that has historically strengthened the naira. Additionally, the approach of the holiday season is expected to drive forex inflows, which may help stabilize demand.
Despite recent volatility, experts remain cautiously optimistic that NAFEM’s increased turnover and CBN’s intervention efforts will support the naira’s stability through the end of the year.
