The foreign exchange turnover in July stood at N11.48tn ($7.39bn) at the official trading window for the Nigerian currency, which was higher than the N10.01tn that was traded in the previous month.
This was disclosed in the financial markets monthly report for July published by the FMDQ, which houses the official foreign exchange trading platform.
In dollar terms, FX market turnover in July recorded a 10.02 per cent ($0.67bn) month-on-month increase from $6.72bn in the prior month.
Also, the naira depreciated against the dollar, with the spot exchange rate increasing by 4.88 per cent (N72.58) to close at an average of $/1,560.32 in July from $/1,487.74 in June.
The exchange rate volatility also increased in July as the local traded around $/1,500.32– $/1,621.12, compared to $/1,473.66– $/1,510.10 recorded in June 2024.
At the end of the week, the value of the Naira to the dollar appreciated by 62bps to N1570.14/$ to close the week at the NAFEM. The turnover stood at $120.81m with an intra-day high and low of 1606/$ and 1496/$ respectively.
FX turnover is the sum value of all transactions performed in the foreign exchange market in January, reflecting increased trading activities in the forex market in the period under review.
A recent report from the Central Bank of Nigeria indicated that the average exchange rate of the naira against the dollar at the Nigerian Autonomous Foreign Exchange Market fell by 35.53 per cent to $/1,304.72 in the first quarter of 2024, compared to $/841.15 in the last quarter of 2023.
Businesses profiled in the survey say they expect the naira to continue to depreciate in the next three months, beginning in July, but would begin appreciation after six months.
The report said, “Respondent firms expect the naira to depreciate in the current month, next month and next three months but appreciate in the next six months as their indices stood at -22.6 points, -16.5 points, -4.8 points and 13.7 points, respectively.
“They expect the borrowing rate to rise as the confidence indices stood at 15.0, 14.3, 18.3 and 17.4 points, in all the review periods, respectively. At the same time, their perception of inflation indicated that they consider the current inflation rate of 34.19 per cent too high. At 72.8 points, this sentiment was strongest amongst large firms.”
Additionally, the CBN has announced a surge in remittance inflows, reaching $553m in July 2024, a 130.00 per cent year-on-year increase compared to July 2023.
The apex bank said that the growth was largely driven by recent policy initiatives aimed at boosting liquidity in Nigeria’s foreign exchange market, including the issuance of licenses to new international money transfer operators and the adoption of a willing buyer-willing seller model, which ensures IMTOs have timely access to naira liquidity.
Analysts at Meristem Research shared an optimistic outlook that remittance inflows would “continue their upward trajectory, supported by these policies and additional strategic efforts to enhance stability in the FX market”.