Nigeria’s official foreign exchange (FX) market experienced a sharp decline in turnover during the first two weeks of August 2024, coinciding with the recent Retail Dutch Auction conducted by the Central Bank of Nigeria (CBN).
Data from FMDQ, analyzed by Nairalytics, shows a significant drop of $409.16 million, with total turnover falling to $1.5 billion between August 5 and 16, compared to $1.91 billion recorded between July 22 and August 2, 2024.
Despite the overall decline, weekly analysis reveals a 15% increase in turnover between the first and second weeks of August, rising from $698.01 million to $804.74 million.
However, the naira depreciated by 5% against the dollar during this period, sliding from N1,500.32/$1 on July 22, 2024, to N1,579.89/$1 on August 16, 2024.
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The most significant depreciation occurred on July 23, when the naira dropped by 3.13% to N1,548.76/$1, while the highest exchange rate was recorded on August 2 at N1,617.08/$1. These fluctuations in forex turnover suggest varying levels of market liquidity or interventions by regulators to stabilize the naira.
In the first week of August, the CBN sold $876.26 million at N1,495/$1 to 26 qualified banks during its latest Retail Dutch Auction.
A total bid of $1.18 billion was received from 32 dealer banks, but bids from six banks were disqualified due to missed deadlines or submission errors.
The data suggests a correlation between days with higher turnover and slight appreciation of the naira, indicating possible interventions or increased dollar supply to support the currency.
On August 6, 2024, the FX turnover on the FMDQ, where the exchange rate is officially traded, closed at just $61.9 million, the lowest since January 2024 and the second-lowest daily average turnover this year.