Nigerian FX Market Sees 56% Drop in Transaction Value Amidst CBN Directives

The Nigerian Autonomous Foreign Exchange Market (NAFEM) witnessed a 56% decline in foreign exchange transaction value, according to data obtained from the FMDQ Exchange.

This sharp drop reflects the impact of recent directives issued by the Central Bank of Nigeria (CBN) aimed at regulating foreign exchange activities in the country.

The value of transactions on the FMDQ platform, which monitors NAFEM transactions, nosedived from $465.29 million on Tuesday to $203.93 million on Wednesday.

This abrupt decline underscores a noteworthy shift in FX market dynamics following the regulatory interventions by the CBN.

The CBN’s recent circulars have imposed stringent measures on banks and FX dealers, compelling them to divest excess dollar holdings and report transparent and accurate FX trading data.

While these measures aim to enhance market transparency and stability, they have triggered a tangible decrease in FX market activity.

Simultaneously, the naira faced downward pressure against the dollar, slipping by 1.4% at the parallel market to trade at N1,480/$ compared to N1,460/$ on the preceding day.

Bureau De Change operators attributed the consistent rise in the dollar’s value to heightened demand for the greenback, further exacerbating the naira’s depreciation.

The official market also reflected a weakening naira against the dollar, as evidenced by data from the FMDQ Exchange website.

Amidst these developments, market participants closely monitor the evolving FX landscape, navigating through regulatory changes and economic dynamics impacting currency valuations and market liquidity.