By Elizabeth Adegbesan

The volume of dollars traded (turnover) in the Investors and Exporters (I&E) window of the Nigerian foreign exchange (Forex) market fell  by five per cent, Year-on-Year (YoY) to $31.29 billion last year from $33.04 billion in 2020.

Vanguard findings from the Central Bank of Nigeria, CBN, forex data    show that   turnover recorded in the first quarter 2021, Q1’21, was, however, the weakest at $3.7 billion, while second quarter, Q2’21, recorded massive surge to $6.64 billion. The Q3’21 also recorded massive increase to $9.91 billion.  Similarly, Q4’21 recorded an increase of $11.04 billion.

Meanwhile, the naira depreciated by N44.75 kobo in the window during the review period.

Data from FMDQ showed that the indicative exchange rate for the window fell to N435 per dollar as at December ending from N390. 25 per dollar on January 1st, 2021.

Speaking on the economy and business environment in 2021, the Chief Executive Officer, Centre for   the Promotion of Private Enterprise,  Dr. Muda Yussuf, noted that

the challenge of forex to investors in 2021 was multidimensional. 

He stated: “The forex challenge was a major predicament that investors had to grapple in 2021. The dimensions of this dilemma are the sharp depreciation of the currency, the liquidity crisis in the foreign exchange market, which manifests in the acute shortage of foreign exchange in the official window and volatility of the exchange rate which creates considerable uncertainty and unpredictability for investors.”

He, however, proposed the adoption of a flexible exchange rate regime this year.

He said: “Our proposition is that we should adopt a flexible exchange rate policy regime.   

“We would like to clarify that this is not a devaluation proposition. Rather, it is a pricing mechanism that reflects the demand and supply fundamentals in the foreign exchange market.   It is a model that is sustainable, predictable and transparent. It is a policy regime that would reduce uncertainty and inspire the confidence of investors. It is a policy framework that would minimize discretion and arbitrage in the foreign exchange allocation mechanism.”