Recent data from the Financial Markets Dealers’ Quotation (FMDQ) platform has revealed notable fluctuations in Nigeria’s foreign exchange market, highlighting the naira’s performance against the dollar over the past week.
On June 6, 2024, the naira recorded an exchange rate of N1,481.49/$1 on the NAFEM window, marking a modest 0.48% increase from previous rates. Concurrently, FX turnover reached $213.31 million, reflecting a 3.84% rise in trading activity.
However, the following day, June 7, 2024, saw a slight depreciation of the naira to N1,483.99/$1, indicating a marginal decline of 0.17%. Interestingly, despite the depreciation, FX turnover surged significantly to $269.27 million, marking a substantial 26.23% increase.
By June 10, 2024, the naira marginally appreciated again to N1,483.62/$1, showing a minor increase of 0.02%. However, FX turnover experienced a sharp decline of 39.95% from the previous trading session, underscoring market volatility.
These fluctuations come in the wake of Afrexim Bank’s announcement on June 6, 2024, regarding the disbursement of $925 million as part of a $3.3 billion crude oil-backed loan agreement. The injection of funds aimed to stabilize the forex market, yet the subsequent volatility in exchange rates indicates ongoing challenges in market stabilization efforts.
Since the unification of the FX market in June 2023 and the subsequent depreciation of the naira, the federal government, through the NNPC, secured a $3.3 billion crude oil-backed loan facility from Afrexim Bank. The loan was intended to mitigate severe forex market volatility, a goal reiterated by the National Economic Council (NEC) last year.
Trading data reveals that on June 10, 2024, the naira traded within a range of N1,505/$1 and N1,410/$1, demonstrating significant intraday fluctuations. While such variability is common in volatile markets, it underscores the market’s response to financial interventions and shifts in supply and demand dynamics.
As Nigeria continues to navigate economic challenges, including forex market stability, stakeholders are closely monitoring these developments, with expectations of sustained efforts to stabilize the exchange rate and bolster economic resilience.
