The exchange rate at the parallel market remained stable closing at N465/$1 on Tuesday, July 14, 2020. However, on the officially recognized NAFEX Market, the forex turnover dropped by 64.4% while the exchange rate remained stable at N386/$1.
Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable as it closed at N465 to a dollar on Tuesday, according to information from Aboki FX a prominent FX tracking website. This was the same rate that it exchanged on Monday. However, during intraday trading, Nairametrics research observed the dollar sold for as high as N470/$ and as low as N462/$1. Nairametrics FX tracker reported a parallel market FX rate of N470/$1.
NAFEX: The Naira remained stable against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N386/$1, this was the same rate that was reported on Monday, July 13. The opening indicative rate was N387.92 to a dollar on Tuesday. This represents a 33 kobo drop when compared to the N387.46 to a dollar that was recorded on Monday.
Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window). Nairametrics reported a few weeks ago that the government has set plans in motion to unify the multiple exchange rate in line with requirements from the World Bank. Nigeria is seeking a world bank loan of up to $3 billion. The country has been under pressure from the International Monetary Fund and the World Bank for currency reforms.
Meanwhile, forex turnover at the Investor and Exporters (I&E) window recorded a decline on Tuesday, July 14, 2020, as it dropped by 64.4% day on day. According to the data tracked by Nairametrics, forex turnover dropped from $36.28 million on Monday, July 13, 2020, to $12.91 million on Tuesday, July 14, 2020. The very low turnover reaffirms the scarcity of dollars and an indication of the liquidity pressure in the foreign exchange market. This also is a far cry from an average of $200 million recorded at major trading days during the last few weeks.
Nairametrics reported last week that the CBN official rate has been adjusted from N360 to a dollar to N381 at its SMIS window where forex is sold to importers and SME’s. A note from renaissance capital suggests that the naira might be depreciated again at the official window if the parallel market or unofficial rate continues to weaken further. As long as there are restrictions on access to dollars, businesses will continue to patronize the unofficial market to meet up with their demands.
Forex News: On Monday, the Central Bank of Nigeria (CBN) has directed all authorised dealers to immediately discontinue the processing of Forms M for maize/corn importation into the country. This directive is contained in a notice that was addressed to authorised dealers and signed by Dr O.S Nnaji, CBN’s Director in charge of Trade and Exchange Department.