On September 6, 2024, the naira experienced a significant recovery in the official market, closing at N1,593.32 per dollar, which represents a 2.89% increase following three days of decline.
Recent data from the FMDQ indicates that this rebound brought the naira back below the N1,600 per dollar mark, providing some respite to the local currency market after a week characterized by considerable volatility.
This recovery coincided with the settlement of a $500 million domestic dollar bond to investors and an announcement from the Central Bank of Nigeria (CBN) regarding the sale of $20,000 to each Bureau De Change (BDC) operator nationwide.
The notable recovery on September 6 came after three days of depreciation, starting on September 3, when the naira fell by 1.59% to close at N1,611.34 per dollar.
The downward trend continued on September 4 and 5, with the currency weakening further by 0.89% and 0.83%, closing at N1,625.88 and N1,639.41 per dollar, respectively.
While the closing rate on Wednesday marked a six-month low, Thursday's rate represented a seven-month low, highlighting a challenging week for the local currency.
On Friday, the naira fluctuated between a high of N1,665 and a low of N1,580 per dollar, reflecting significant volatility in the foreign exchange market.
The appreciation of the naira coincided with a significant increase in foreign exchange (forex) turnover, which rose by 31.96% to $245.17 million from $185.79 million on September 5.
This surge in dollar availability on the Nigerian Autonomous Foreign Exchange Market (NAFEM) seems to have facilitated the currency's recovery, with traders noting that enhanced liquidity played a crucial role in elevating demand for the naira.
Nevertheless, the forex turnover statistics from the FMDQ indicate a market characterized by high volatility. On September 2, 2024, turnover plummeted to $71.18 million, marking a substantial decline of 58.81% from the previous day's figures.
The following day, September 3, saw a dramatic rebound of 194.48%, with turnover climbing to $209.61 million as market participants aimed to take advantage of the naira's depreciation.
Turnover remained strong on September 4, though it experienced a slight decrease to $205.76 million, reflecting a minor decline of 1.84% from the day before. However, by September 5, liquidity issues re-emerged, causing turnover to drop to $185.79 million, a decrease of 9.71%.
The subsequent rise to $245.17 million on September 6 indicates an influx of dollar supply, which likely aided in the naira's recovery.