Forex turnover dropped by 17.36% to $145.89 million as the Nigerian naira tumbled against the dollar marginally on Friday, January 19th, 2024, in both the official and black markets.
The official exchange rate closed at N902.45 to a dollar, reflecting a 0.04% depreciation in the domestic currency, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Industry experts have weighed in on the currency depreciation and its implications. Mr. Olatunde Amolegbe, former President and Chairman Governing Council of the Chartered Institute of Stockbrokers (CIS) and Managing Director of Arthur Steven Asset Management Limited, emphasized the importance of market and participant confidence in maintaining a stable exchange rate.
Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, highlighted concerns over forex supply, stating that the naira is expected to remain volatile in the near future.
The shortage of dollars in the market has led to increased speculative buying, with more market participants opting for long positions on the dollar and shortening the naira.
The depreciation of the naira and the volatility in the forex market have important implications for businesses and individuals engaged in international trade. It can significantly impact import costs and increase the price of goods and services that rely on imported inputs.
As the naira continues to face challenges in the forex market, it is crucial for policymakers and stakeholders to implement measures that restore market confidence and address forex supply concerns. This includes promoting sustainable economic growth, attracting foreign direct investment, and diversifying the economy.
The stability of the exchange rate is not only important for businesses and investors but also for the average Nigerian citizen. It affects the cost of living, purchasing power, and overall economic stability.
As the nation navigates these economic challenges, the government, regulatory bodies, and market participants must work together to find sustainable solutions that promote a stable exchange rate and ensure a favorable business environment.
In conclusion, the Nigerian naira depreciated marginally against the dollar, resulting in a forex turnover of $145.89 million. Experts emphasize the importance of market confidence and address lingering forex supply concerns to stabilize the exchange rate. The shortage of dollars has led to increased speculation in the forex market, further impacting the naira’s value. As the nation copes with these challenges, collaborative efforts are needed to restore stability and promote a favorable economic climate.
