The value of foreign exchange transactions in the Investors’ and Exporters’ window experienced a significant 65.79% increase between May and June 2023, according to data obtained from the FMDQ Exchange and the Central Bank of Nigeria (CBN). Authorized dealers and their clients traded an impressive N4.77 trillion ($7.72 billion) worth of foreign exchange in June alone.
Compared to the N2.87 trillion ($6.21 billion) traded in May, the value of forex transacted in June rose by N1.89 trillion ($1.51 billion). In the combined two-month period, total foreign exchange transactions reached N7.65 trillion or $13.94 billion.
This remarkable month-on-month increase came in the wake of President Bola Tinubu’s declaration during his presidential speech on May 29, 2023. In his address, President Tinubu pledged to review the foreign exchange market to enhance liquidity. This commitment aimed to address concerns raised by foreign investors about the scarcity of forex and multiple forex rates, which had hindered the repatriation of earnings for them.
The surge in foreign exchange transactions reflects the positive response to President Tinubu’s promise, instilling confidence in foreign investors and driving increased activity in the Investors’ and Exporters’ window.
“We shall ensure that investors and foreign businesses repatriate their hard-earned dividends and profits home,” Tinubu said.
He also stated that: “Monetary policy needs a thorough house cleaning. The Central Bank must work towards a unified exchange rate.
“This will direct funds away from arbitrage into meaningful investment in the plant, equipment, and jobs that power the real economy.”
Following the statement, Tinubu has suspended the governor of the Central Bank of Nigeria (CBN) and also collapsed the multiple exchange rates to a single rate in the Investors’ and Exporters’ window.
While liquidity rose amid the monetary policy review, the single exchange rate in the I&E window has been on the rise, as the naira to dollar rate last traded at N768.60/$1 on Thursday, against the N664.04/$1 rate the CBN devalued the naira to on June 14, 2023.
Also, the foreign reserves dropped to a two-year low of $33.94 billion as of Thursday, July 25, compared to the $35.14 billion reported on May 26, three days before former President Muhammadu Buhari left office.
Meanwhile, the total Foreign Exchange Derivatives recorded in June was N3.91 trillion ($6.34 billion), from N2.40 trillion ($5.19 billion) in May.
