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Spot FX market turnover was $9.90bn (N15.74trn) in August 2024, representing a 33.88 per cent ($2.51bn) Month on Month (MoM) increase from the turnover recorded in July 2024 ($7.39bn).
This was contained in the FMDQ Markets Monthly Report for August 2024.
Nigeria’s foreign exchange market has encountered significant challenges, largely driven by volatility in global oil prices and the impact of domestic economic policies on liquidity.
These fluctuations have created an environment of uncertainty, complicating efforts to maintain stability in the market and posing challenges for businesses and investors alike.
The interplay between external economic factors and internal policy decisions has underscored the complexity of managing the country’s foreign exchange reserves and has had far-reaching implications for the broader economy.
However, the recent increase in foreign exchange turnover reflects a strengthening confidence in the Nigerian economy and a continuing reduction in liquidity risks.
Under the leadership of CBN Governor Mr. Olayemi Cardoso, the naira has been allowed to trade more freely against the dollar, facilitating a more dynamic foreign exchange environment.
The report noted that in the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 1.68 per cent ($/N26.24) to close at an average of $/N1,586.56 in August 2024 from $/N1,560.32 recorded in July 2024.
It added further that the exchange rate volatility increased in August 2024 as the Naira traded within an exchange rate range of $/N1,543.84 – $/N1,617.08 compared to $/N $/N1,500.32 – $/N1,621.12 recorded in July 2024.
According to the report, FI market turnover in August 2024 was N12.14trn, representing a Month on Month (MoM) increase of 76.43 per cent (N5.26trn) from the turnover recorded in July 2024 (N6.88trn).
FMDQ noted that the MoM increase in turnover was driven by the increase in T.bills, OMO Bills, and FGN Bonds transactions, while transactions in other bonds recorded a MoM decrease of 18.43 per cent (N0.01trn).
As a result, the trading intensity (TI) for T.bills and FGN Bonds increased MoM by 0.07 bps and 0.04bps to 0.28 and to 0.10, respectively
“T.bills with term-to-maturity (TTM) between >6M – 12M and FGN Bonds with TTM between >5Y – 10Y, were the most traded sovereign FI securities, accounting for 36.23 per cent (N2.17trn) and 26.88 per cent (₦1.61trn) of the secondary market turnover for sovereign FI securities in the spot market, respectively,” FMDQ said.
THE WHISTLER
