Despite recent fluctuations in Nigeria’s foreign exchange market, the volume of dollars traded (turnover) in the Nigerian Foreign Exchange Market (NAFEM) saw a significant 23.8% month-on-month (MoM) increase, reaching $2.23 billion in October 2023, up from $1.8 billion in September. This surge reflects a heightened influx of foreign exchange into the economy during the period.

Data obtained from FMDQ’s weekly transaction reports for NAFEM reveals that turnover experienced rapid fluctuations throughout the month, ranging from $326.44 million in the first week of October to $642.89 million in the final week. However, it decreased to $163.04 million in the last two trading days of the month.

Meanwhile, the local currency lost N59.95 against the dollar in NAFEM during October.

Information from FMDQ Exchange indicates that the Naira depreciated to N815.32 per dollar in the Investors and Exporters (I&E) window by the end of October 2023, compared to N755.27 per dollar on September 29th, 2023.

In the parallel market, the Naira depreciated by N170, with the rate closing at N1,170 per dollar at the end of October, as opposed to N1,000 per dollar on September 29th, 2023.

As a result, the disparity between the official and parallel market exchange rates expanded to N354.68 per dollar on October 31st, 2023, up from N244.73 per dollar on September 29th.

Financial analysts are emphasizing the importance of prudently managing the country’s foreign reserves to meet liquidity demands and protect the Naira.

In their financial outlook for the week, analysts at Cowry Asset Management Plc noted: “Nigeria’s foreign exchange reserves, while not at their peak, have raised concerns about the nation’s ability to meet import requirements and fulfill debt obligations. It is noteworthy that despite the recent decline, Nigeria’s foreign exchange reserves are still relatively robust, covering approximately 4.4 months of current external payments. Cowry Research believes that this underscores the need for prudent management of these reserves to ensure the country’s economic stability, liquidity needs, and Naira defense.”

According to data from the Central Bank of Nigeria (CBN) on ‘Movement in Reserve,’ gross foreign exchange reserves stood at $33.37 billion as of October 30th, 2023, representing a 0.42% increase compared to the $33.23 billion recorded on September 29th, 2023.

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