Naira Starts August Stronger Despite Slower FX Market Activity

Nigeria’s FX market started August on a stronger footing, with the naira appreciating against the United States dollar despite a slowdown in trading activity at the official foreign exchange window.

Data obtained from the Central Bank of Nigeria (CBN) showed the official exchange rate strengthened to N1,364.83/$ on August 3 from N1,368.22/$ recorded on July 31, representing an appreciation of N3.39, or 0.25 per cent.

The gains extend the currency’s recovery after coming under pressure in the third week of July, when it weakened above N1,375/$ before rebounding in the final trading sessions of the month.

However, the stronger exchange rate came amid weaker market activity.

The CBN’s Nigerian Foreign Exchange Market (NFEM) data showed total turnover stood at $137.05 million on Monday, more than double the $58.99 million traded on July 31 but still significantly below the $416.42 million recorded on July 22.

Similarly, the number of transactions executed in the FX market rose to 138 deals from 67 at the end of July but remained below the 198 transactions completed on July 22, indicating that overall liquidity has yet to return to levels recorded earlier in the month.

The apex bank’s data further showed that the day’s highest exchange rate was N1,368/$, while the lowest traded rate settled at N1,362/$. The market closed at N1,365/$, with a simple average rate of N1,364.89/$.