Report Reveals Forex Turnover Crashes By 47%
The foreign exchange turnover of Naira against the United States of American dollar on the Investors & Exporters window fell by 47.08 per cent in April.
This was disclosed in the monthly report of activities on the FMDQ which was released on Tuesday.
The FMDQ said that the “Spot FX market turnover was N2.18trn ($4.72bn) in April 2023, representing a MoM decrease of 47.08 per cent (N1.94trn) from the turnover recorded in March 2023 (N4.13trn).”
It was also revealed that the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 0.34 per cent ($/N1.59) to close at an average of $/N463.09 in April 2023 from $/N461.50 recorded in March 2023.
Also, further exchange rate volatility increased marginally in April 2023 as the naira traded within an exchange rate range of $/N462.00 – $/N464.00 compared to $/N461.00 – $/N462.00 recorded in March 2023.
Meanwhile, the Nigerian currency traded at N463.50 per dollar on Monday at the I&E window, signaling a 50kobo dip compared to its previous trading rate of N463.00. The daily turnover for Monday stood at $106.84m with the exchange rate hitting an intraday trading high of N467 and a low of N460.
At the official market, the naira strengthened by 0.01% to close at N461.31/dollar on Monday; the naira at the parallel market, however, closed flat at N765/dollar.
In a research note, an analyst at South Africa-based lender, Absa Group, projected that the Naira was going to be devalued by 15 per cent in the coming weeks.
The analyst, who is a fixed-income and currency expert at Absa, Nikolaus Geromont, said that “This discrepancy between the official and parallel markets is among the widest since the managed floating rate was introduced in 2016. (With) Tinubu calling for more flexibility in the exchange rate regime, we expect the naira to be upwardly adjusted to 530/USD after the presidential inauguration.”
The World Bank in April advised the Federal Government to unify the nation’s multiple exchange rate windows and carry out some other reforms to strengthen the economy and restore macroeconomic stability.
The Macro Poverty Outlook for Nigeria partly read, “Macroeconomic stability has weakened amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetization of the fiscal deficit.
“The authorities can strengthen the economy by restoring macroeconomic stability through reforms to increase oil and non-oil revenues, tighten monetary policies to reduce inflation and unify the multiple FX windows and adopt a single, market-responsive exchange rate.”