Forex turnover grew by 22% to $120.89 million as the Nigerian naira further depreciated against the dollar on Wednesday, 13th December 2023, closing at N904.65/$1 at the official market.
The domestic currency depreciated 4.38% to close at N904.56/$1 to a dollar at the close of business on Wednesday, data from the NAFEM where forex is officially traded, showed.
This represents an N39.62 gain or a 4.38% increase in the local currency compared to the N837.77 it closed on Monday.
The intraday high recorded was N1186/$1, while the intraday low was N720.50/$1, representing a wide spread of N255/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $120.80 million, representing a 22.89% increase compared to the previous day.
However, the naira dropped at the parallel forex market where forex is sold unofficially, the exchange rate appreciated by 0.3.97%, quoted at N1260/$1, while peer-to-peer traders quoted around N1229/$1.
What economists are saying
The former President and Chairman governing council of, the Chartered Institute of Stockbrokers (CIS) and the Managing Director, of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe in an exclusive chat with Nairametrics said for the exchange rate to be stable, market and participants confidence is key.
“Confidence is what makes foreigners want to come to invest in your country and make locals want to keep their investments here.
“In the absence of these dynamics, demand will naturally outstrip supply and you see the sort of instability we are experiencing now.
“I think the decision to clear FX commitment backs will be positive for market confidence, but the desired impact might manifest in the medium term rather than in the short run.
“I also think the efforts at using monetary policy tools to reduce system liquidity could ultimately reduce currency speculation but again it’s not a silver bullet.
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“Deliberate efforts need to intensify at effecting structural changes that will encourage import substitution such as improved security, better infrastructure increased foreign direct investments, and encouraging local production,” he said.
Managing Director/CEO, of Financial Derivatives Company Limited, Bismarck Rewane had said in a report that the naira is expected to remain volatile on lingering forex supply concerns.
The dollar dearth means speculative buying is likely to continue, with an increasing number of market participants taking long positions on the dollar while shorting the naira.
