Dollar sales by Deposit Money Banks and other entities at the Nigeria Autonomous Foreign Exchange Market dropped by $252 million to $84.1m on Friday.
This represents a 74 percent drop from the $331.1m transactions recorded at the official Nigeria Autonomous Foreign Exchange Market on Thursday.
Meanwhile, the naira depreciated to N1,537/$ on Friday from N1,498/$ recorded at the close of trading activity on Thursday at the official market.
Analysis of data obtained from FMDQ Security Exchange showed that forex turnover plunged by 74 percent to $84.10m on Friday from $336.11m on Thursday. However, aside from commercial banks, the Central Bank of Nigeria, oil firms, and multinationals also sell dollars at NAFEM.
At the parallel market, on Friday, the naira also depreciated to N1,670/$ from N1,600/$ recorded on Thursday amid a demand with a steady demand for the greenback.
Further analysis for the week ending showed that the supply started on a low at $116.11m on Monday; it increased by $292.3m to $381.92m on Tuesday but dropped to $117.87m on Wednesday. On Thursday, the supply increased to $336.11m.
Market experts hinted that the naira depreciation followed a strong demand for dollars by speculators and individuals traveling for business, tourism, education, and health.
According to currency dealers, the demand for the greenback may not end anytime soon.
The FMDQ report indicated that the banks led others to sell $1.97bn in the first week of the CBN circular which had mandated banks not to exceed a new threshold in their FX prudential guidelines.
In a series of guidelines, the CBN had ordered Deposit Money Banks to sell their excess dollar stock. It also warned lenders against hoarding excess foreign currencies for profit.
On Thursday, the apex bank released another set of guidelines that stopped banks from paying Personal Travel Allowance to their customers.
In a second circular signed by its Director, Trade and Exchange Department, Hassan Mahmud, it also asked International Oil Companies not to repatriate all their revenue to their parent companies at once. In the third circular, the apex banks also reviewed its guidelines to stop under-invoicing of exports and over-invoicing of imports.
Nevertheless, challenges persist in the forex market despite the Central Bank’s efforts to boost forex supply through various policy interventions.
The gap between the rates in the official market and the parallel market is once again widening, raising concerns about the potential resurgence of round-tripping activities.
In response to the circular, banking institutions and IMTOs have begun the implementation, carrying out operational adjustments to accommodate the revised remittance framework by issuing notices to their customers.
