Forex market recorded $4bn turnover in January -Report

The official foreign exchange market, the Nigerian Autonomous Foreign Exchange Market, witnessed a 40.46 per cent drop in turnover to $4.37bn (N4.03tn) in January from $7.34bn recorded in December 2023.

According to the latest Financial Markets Monthly Report issued by FMDQ, which houses the NAFEM, the US dollar appreciated against the naira, with the spot exchange rate increasing by 10.44 per cent ($/N93.66) to close at an average of $/N990.96 in January 2024 from $/N897.30 recorded in the previous month.

The report added that exchange rate volatility increased in January 2024 as the naira traded within an exchange rate range of $/N838.95 – $/N1,482.57 compared to $/N806.73 – $/N1,099.05 recorded in December 2023.

The report further noted that the market turnover in January 2024 was N7.19tn, representing a month-on-month decrease of 55.92 per cent (N9.12tn) from the turnover recorded in December 2023 (N16.31tn).

FMDQ noted that the MoM decrease in the FI market turnover was driven by 62.31 per cent (N3.24tn), 2.54 per cent (N0.06tn), 79.50 per cent (N3.49tn), 53.27 per cent (N2.28tn) and 59.45 per cent (N0.05tn) decrease in turnover across Treasury Bills, OMO Bills, CBN Special Bills, FGN Bonds and Other Bonds, respectively.

“As a result, the trading intensity for T.Bills and FGN Bonds decreased MoM by 0.56bps and 0.11bps to 0.30 and 0.10, respectively T.bills and FGN Bonds within the >6M – 12M and >20Y tenors respectively were the most traded sovereign FI securities, accounting for 35.86 per cent (N1.42tn) and 26.52 per cent (N1.05tn) of the secondary market turnover for sovereign FI securities in the spot market,” the report said.

According to the report, total turnover in the money market segment decreased MoM by 21.45 per cent (N1.54tn) to N5.64tn in January 2024.

Meanwhile, total turnover in the FX derivatives market segment in January 2024 was $4.56bn (N4.21 trillion), representing a MoM decrease of 29.52 per cent ($1.91bn) from the December 2023 figures.

The Exchange said that the MoM decreases in the FX derivatives turnover were jointly driven by the 27.67 per cent ($1.71bn), 62.50 per cent ($0.15bn), and 100.00 per cent ($0.05bn) decrease in FX Swaps, FX Forwards and FX Futures transactions, respectively.

On Wednesday, the naira depreciated marginally against the dollar to N1,605.74 at the official market from N1,602 recorded the previous day.

The drop on Tuesday marks a second-day decline after last week’s win against the greenback note, indicating that demand pressures persist in the forex market as supply remains insufficient.

This decline coincides with the announcement from the cryptocurrency trading platform, Binance, that it will cease trading activities involving the Nigerian currency.

Binance was accused of exploiting the Nigerian currency, Naira, leading to its free fall in value. The company is, in addition, facing allegations of terrorism financing, money laundering and tax invasion, among others.

At above N1,600/$1, the exchange rate between the naira and dollar is down by 43 per cent in 2024 and remains one of the worst currencies in Sub-Saharan Africa. This is despite several policy measures introduced by the apex bank to resolve the forex crisis.