The foreign exchange turnover in Nigeria reached N11.48 trillion ($7.39 billion) in July 2024, marking a significant increase from the N10.01 trillion traded in June. This was revealed in the latest financial markets monthly report published by FMDQ, the official platform for foreign exchange trading in Nigeria.
In dollar terms, the FX market turnover for July showed a 10.02% increase, amounting to $0.67 billion, rising from $6.72 billion in the previous month. This surge reflects heightened trading activity in the forex market during the period under review.
Despite the increase in turnover, the naira experienced further depreciation against the dollar. The spot exchange rate rose by 4.88% (N72.58), with the naira closing at an average of N1,560.32 per dollar in July, compared to N1,487.74 in June. Exchange rate volatility also heightened, with the naira trading between N1,500.32 and N1,621.12 per dollar in July, compared to a range of N1,473.66 to N1,510.10 in June.
At the end of the week, the value of the naira appreciated slightly by 62 basis points to N1,570.14 per dollar, with the turnover recorded at $120.81 million. The intra-day trading range saw a high of N1,606 per dollar and a low of N1,496 per dollar.
The report also highlighted concerns about the continued depreciation of the naira. Businesses surveyed expect the currency to weaken further in the next three months but anticipate a possible appreciation in the following six months. The Central Bank of Nigeria (CBN) reported that the average exchange rate in the Nigerian Autonomous Foreign Exchange Market (NAFEM) fell by 35.53% in the first quarter of 2024, reaching N1,304.72 per dollar, down from N841.15 per dollar in the last quarter of 2023.
In addition to the forex market dynamics, the CBN reported a substantial increase in remittance inflows, which surged to $553 million in July 2024, a 130% year-on-year increase compared to July 2023. This growth was attributed to recent policy initiatives aimed at enhancing liquidity in the foreign exchange market, including the issuance of licenses to new international money transfer operators (IMTOs) and the adoption of a willing buyer-willing seller model to ensure timely access to naira liquidity for IMTOs.
Analysts at Meristem Research have expressed optimism that remittance inflows will continue to rise, supported by these policies and additional efforts to stabilize the FX market. However, the broader economic outlook remains cautious, with concerns over inflation, which respondent firms in the CBN survey described as “too high” at 34.19%. The firms also anticipate a rise in borrowing rates in the coming months.