The forex turnover on the FMDQ, where the exchange rate trades officially, closed at a turnover of just $61.9 million, the lowest since January 2024.
This is also the second-lowest daily average turnover this year, second only to the $59.6 million recorded on January 8, 2024, which is the lowest this year.
The month of January saw a remarkably low forex turnover as the central bank struggled to find a strategy to restore confidence in the country’s forex policy.
However, since then, the forex market has been stable despite more than 40% depreciation so far this year.
What the data is saying
According to data from the FMDQ, the exchange rate closed trading on Tuesday at N1,601/$1, a slight appreciation from the N1,617/$1 reported on Monday.
- The intra-day highs and lows for the week also recorded N1,623 and N1,560, respectively, suggesting further weakening on the high end of trades.
- However, the market turnover of just $61.9 million fell from the $77 million reported a day earlier.
- Incidentally, the $77 million reported on Monday was also the lowest since January, suggesting that the forex market might be experiencing a squeeze.
- One trader informed Nairametrics that this could be a result of the “end hunger” protest that has engulfed most parts of the country, affecting businesses.
- Another source suggests this could also be due to the massive stock market sell-offs reported on Monday.
Meanwhile, on the parallel market where the exchange rate is sold unofficially, trades were quoting around N1605/$1, in line with the official rates.
Nigeria’s external reserve also $36.8 billion as of August 5, 2024.
This is a developing story….
