The naira concluded the week on a positive note, appreciating by N40.49 on a week-on-week basis in the official foreign exchange (FX) market, despite a noticeable decrease in currency transaction volumes.
Data from the FMDQ Securities Exchange Limited indicated that the Nigerian Autonomous Foreign Exchange Market (NAFEM) recorded a 2.5 percent increase in the naira’s value, with the dollar quoted at N1,600.78 on Friday, October 18, down from N1,641.27 the previous Friday.
This appreciation marks a significant improvement over the trading week.
On a day-to-day basis, the naira gained 3.73 percent, equating to N59.71, closing at N1,600.78 on Friday compared to N1,660.49 on Thursday at NAFEM.
The intraday high for the naira reached N1,671.50 on Friday, just slightly below the N1,670 observed the previous day.
However, its intraday low showed some depreciation, hitting N1,592 on Friday compared to N1,540 on Thursday.
Despite the naira’s weekly gains, market turnover in the official FX space experienced a significant decline.
Total turnover fell by 43.13 percent, dropping from $616.73 million on Friday, October 11, to $350.72 million on Friday, October 18.
Nevertheless, daily turnover saw a slight 6.2 percent increase, rising from $330.18 million on Thursday to $350.72 million on Friday.
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In contrast, the parallel market, or black market, presented a different scenario.
The naira depreciated by 1.2 percent on a week-on-week basis, with the dollar trading at N1,720 on Friday, compared to N1,700 since October 10, 2024.
This volatility occurs amid broader concerns regarding the naira’s overall performance in 2024.
The World Bank’s latest Africa’s Pulse report identifies the naira as one of the worst-performing currencies in Sub-Saharan Africa this year.
As of August 2024, the currency had depreciated by approximately 43 percent since the start of the year, ranking among the weakest regional currencies alongside the Ethiopian birr and the South Sudanese pound.
The report attributes the persistent pressure on the naira to heightened dollar demand from financial institutions, non-financial end-users, and money managers.
Despite Nigeria’s attempts to stabilize the currency through reforms, including the liberalization of the official exchange rate in June 2023, these measures have thus far been insufficient to restore balance in the foreign exchange market.
These recent developments underscore Nigeria’s ongoing challenges in navigating its complex currency environment, with gains in the official market reflecting some positive momentum.
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