Forex turnover rose by 61.86% to hit $198.21 million as the naira further crashed against the dollar at both the official market and the parallel market on Wednesday 22nd of November 2023.
The domestic currency depreciated 1.14% to close at N840.53 to a dollar at the close of business on Wednesday, data from the NAFEM where forex is officially traded, showed.
This represents an N9.56 loss or a 1.14% decline in the local currency compared to the N830.97 it closed on Tuesday.
The intraday high recorded was N1135/$1, while the intraday low was N743.43/$1, representing a wide spread of N391.57/$1.
According to data obtained from the official NAFEM window, forex turnover at the close of the trading was $198.21 million, representing a 61.86% increase compared to the previous day.
Similarly, the naira at the parallel forex market where forex is sold unofficially, the exchange rate depreciated by 0.87%, quoted at N1150/$1, while peer-to-peer traders quoted around N1149.50/$1.
The former President and Chairman governing council of, the Chartered Institute of Stockbrokers (CIS) and the Managing Director, of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe in an exclusive chat with Nairametrics said for the exchange rate to be stable, market and participants confidence is key.
- “Confidence is what makes foreigners want to come to invest in your country and make locals want to keep their investments here.
- In the absence of these dynamics, demand will naturally outstrip supply and you see the sort of instability we are experiencing now.
- I think the decision to clear FX commitment backs will be positive for market confidence, but the desired impact might manifest in the medium term rather than in the short run.
- I also think the efforts at using monetary policy tools to reduce system liquidity could ultimately reduce currency speculation but again it’s not a silver bullet.
- Deliberate efforts need to intensify at effecting structural changes that will encourage import substitution such as improved security, better infrastructure increased foreign direct investments, and encouraging local production,” he said.
Managing Director/CEO, of Financial Derivatives Company Limited, Bismarck Rewane had said in a report that the naira is expected to remain volatile on lingering forex supply concerns.
The dollar dearth means speculative buying is likely to continue, with an increasing number of market participants taking long positions on the dollar while shorting the naira.
Senate approves MTEF for 2024 to 2026, adopts N700/$1 exchange rate
The Senate today approved the Medium-Term Economic Framework (MTEF) and Fiscal Strategy Paper (FSP) for 2024 to 2024 after a presentation by the chairman of the Joint Committee on Finance, Sen. Sani Musa which oversaw the MTEF/FSP.
The Senate approved a slew of recommendations including an inflation rate of 21.4% for 2024, 20.3% in 2025, and 18.6% in 2026.
According to the National Bureau of Statistics, the inflation rate for October stands at 27.33%. KPMG projects Nigeria’s inflation rate to reach 30% in December, although the federal government expects the inflation rate to drop in 2024.
Other decisions reached include the following:
- Crude Oil Production: 1.78 million barrels per day
- Crude Oil Price: $73.6 per barrel
- Exchange Rate: N700 to the dollar
- GDP Growth Rate: 3.76%
- Budget Projection for 2024: N26 trillion
- Projected Revenue for 2024: N16.9 trillion
- Approved Deficit for 2024: N9 trillion
Debate on exchange rate
During the seating, there was a contentious debate on the exchange rate of N700/$ pegged for 2024 as senators queried the feasibility of the proposal.
- The senate also resolved to ban the importation of all items locally produced as a measure to shore up the value of the naira.
The Senate also moved to amend the act of the Bureau of Public Enterprise (BPE) and mandate the Ministry of Finance to take charge of all assets of the federal government both fiscal and material.
About the MTEF/FSP
The Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) guides the federal government’s spending with its economic and social objectives.
- It constitutes a three-year rolling plan that outlines the government’s spending priorities and the corresponding funding mechanisms.
- The approval of the MTEF by both chambers of Nigeria’s parliament clears the path for President Bola Tinubu to submit the country’s 2024 budget proposal of 26 trillion naira ($34 billion) to parliament for consideration.
- The document, endorsed by Tinubu’s cabinet before its submission to lawmakers for approval, anticipates the naira currency to trade at around 700 per dollar in the coming year, with a slight strengthening projected for 2025 and 2026.
