The Nigerian naira sees a slight appreciation in the foreign exchange markets, reaching N1,580 per dollar in the parallel market on Tuesday, compared to N1,590 per dollar the previous day. Similarly, in the Nigerian Foreign Exchange Market (NAFEM), the naira strengthened to N1,560.57 per dollar, reflecting a positive trend in currency value.
However, alongside this uptick in value, there was a notable decrease in dollar turnover within the market. The volume of dollars traded (turnover) dropped significantly by 38 percent, falling from $315.21 million on Monday to $195.13 million on Tuesday. This decline in turnover indicates reduced activity in the foreign exchange market during this period.
As a consequence of the reduced turnover, the margin between the parallel market rate and the NAFEM rate widened considerably. The margin expanded to N29.43 per dollar on Tuesday, up from N17.24 per dollar the previous day. This widening gap underscores the impact of fluctuating market dynamics and trading volumes on currency exchange rates.
Market analysts are closely monitoring these developments, noting that the decrease in dollar turnover could be influenced by various factors such as reduced demand for foreign currency or changes in market sentiment. The widening margin between the parallel market and NAFEM rates also highlights the importance of market liquidity and stability in ensuring fair and efficient currency exchange mechanisms.
Overall, while the naira’s slight appreciation is a positive indicator, the decline in dollar turnover and the widening margin between markets point to ongoing complexities and uncertainties in the foreign exchange landscape. Investors and stakeholders continue to assess market trends and dynamics to make informed decisions in currency trading and financial activities.
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