Naira Plunges as Forex Transactions Drop by 56% in NAFEM

The naira suffered a major setback on Thursday as the value of forex transactions in the Nigerian Autonomous Foreign Exchange Market (NAFEM) plummeted by 56 percent in one day. According to the FMDQ Exchange, the total value of forex transactions fell from $465.29 million on Tuesday to $203.93 million on Wednesday.

This drastic drop disrupted the previous trend of rising forex transactions in NAFEM, which was boosted by the Central Bank of Nigeria (CBN)’s efforts to improve market liquidity. The CBN had issued circulars requiring banks to sell their excess dollar reserves and report their forex trading data accurately and transparently.

However, these measures did not prevent the naira from losing value against the dollar at the parallel market, where it depreciated by 1.4 percent. The naira traded at N1,480 per dollar on Thursday, down from N1,460 per dollar on Wednesday.

Bureau De Change (BDC) operators said that the exchange rate had been increasing throughout the week due to high demand for the dollar. Abdulahi Taura, a BDC operator who spoke with Punch, said, “The dollar has increased to N1,480. People are still demanding it and that’s why it’s increasing.” Another operator, Ibrahim Yahu, confirmed a closing rate of N1,482 per dollar on Thursday, citing the strong demand for the US currency as the main reason.

The naira also weakened in the official forex market, where it closed at N1,479.47 per dollar on Thursday, compared to N1,434.53 per dollar on Wednesday, as per the FMDQ Exchange data.