The positive performance of the naira in the foreign exchange market slowed today, as the local currency was strengthened at the Investors and Exporters (I&E) window.
The naira depreciated to N386.50 to a dollar at the I&E forex window, after the day’s trading session. It lost N0.75 against the dollar when compared to the N385.75 to a dollar that it exchanged on Friday, June 12, 2020.
The exchange rate at the I&E window is different from the Central Bank of Nigeria’s published exchange rate, which currently stands at N360/$1. This is also different from the exchange rate at the parallel market, which was stable at N450 to a dollar, according to information on AbokiFX, as of Monday, June 15.
Available information from the daily trading at FMDQ (where FX is traded by importers and investors) shows that the naira improved against the dollar by N0.96, closing at N386.50 to a dollar, as against the indicative opening rate of N387.46 to a dollar that it opened with on Monday morning. The opening indicative rate on Monday also represents a marginal gain of N0.04 when compared to the N387.50 that it opened with on Thursday.
A cursory look at data from the FMDQ shows that the turnover for the day increased by 14.62% at $14.27 million, when compared with the $12.45 million that was recorded on Thursday, June 11.
In a related development, the local currency on Monday, June 15, 2020, remained stable for the third consecutive working day at the parallel market, otherwise known as the black market, as it exchanged for N450 to a dollar, which was the same rate that was recorded on Thursday.
The stability of the naira at the black market can be attributed to a drop in demand for foreign exchange, especially by speculators at the market. Although the local currency has been hitting record lows both at the parallel market and over the counter spot markets since the rate adjustment by CBN in March, analysts do not expect any significant change in the exchange rates in the coming week, as there are no strong fundamentals to cause such changes.
However, according to the Medium Term Expenditure Framework and Fiscal Strategy (MTEF/FSP) report that was released by the Federal Ministry of Finance, Budget and National Planning, the exchange may be further devalued to help reduce the wide disparity in the foreign exchange market.