On Friday, the Nigeria Autonomous Foreign Exchange Market (NAFEM) witnessed a substantial decline in dollar sales, plummeting to $84.1 million from the previous day’s $331.1 million, representing a 74% drop.
Concurrently, the value of the Nigerian naira depreciated, falling to N1,537 against the US dollar compared to N1,498 recorded in the preceding trading session.
Data sourced from the FMDQ Security Exchange revealed that the drastic reduction in forex turnover at NAFEM reflects dwindling activities in the foreign exchange market.
Despite the participation of entities such as commercial banks, the Central Bank of Nigeria (CBN), oil firms, and multinationals in dollar sales, the overall transaction volume experienced a notable contraction.
Throughout the week, the forex supply at NAFEM exhibited fluctuations. It commenced with a modest supply of $116.11 million on Monday, surged to $381.92 million on Tuesday, but regressed to $117.87 million by Wednesday.
Thursday witnessed a slight recovery with supply climbing to $336.11 million.
Market analysts attributed the depreciation of the naira to intensified demand for dollars driven by speculation and individuals seeking foreign currency for various purposes including business, tourism, education, and healthcare.
The widening gap between official and parallel market rates raises concerns about potential round-tripping activities.
Despite recent CBN interventions and policy directives aimed at enhancing forex supply and curbing malpractices, challenges persist in the forex market.
The evolving dynamics underscore the need for sustained efforts to stabilize the currency and foster confidence in Nigeria’s financial ecosystem. As stakeholders monitor market developments, attention remains focused on implementing effective measures to mitigate forex volatility and sustain economic stability.