Nigeria’s exchange rate at the NAFEX window appreciated closing at N385.83 during intraday trading on Thursday, August 13, 2020. In another development, the exchange rate at the parallel market remained stable for a fourth consecutive trading day on Thursday as it closed at N475/$1.
Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable again for the third straight day against the dollar to close at N475/$1 on Thursday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Wednesday, August 12.
NAFEX: The Naira appreciated marginally against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N385.83/$1.
- This represents a 17 kobo gain when compared to the N386 rate close that was reported on the last trading day, Wednesday, August 12.
- The opening indicative rate was N386.04 to a dollar on Thursday. This represents a 21 kobo gain when compared to the N386.25 to a dollar that was recorded on Wednesday.
- The N387 to a dollar is the highest rate during intraday trading. It also sold for as low as N380/$1 during intraday trading.
Forex is sold at several prices and at different times during the day.
Forex Turnover: Meanwhile, forex turnover at the Investor and Exporters (I&E) window recorded a significant increase on Thursday, August 13, 2020, as it rose by 92.48% a day on day.
- According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $21.55 million on Wednesday, August 12, 2020, to $41.48 million on Thursday, August 13, 2020.
- The forex turnover for the day although recorded significant improvement from the previous trading day is still below the $50 million mark. This is just as dollar supply has remained very weak.
- The average forex sale for last week was about $50.6 million which is an improvement on the $32 million that was recorded the previous week. FX turnover which hit a record low of $3.97 million on Monday recorded a significantly improved figure on Thursday but is still a far cry from the over $200 million turnover that was recorded in January.
- Total forex trading at the NAFEX window in the month of July was $937 million compared to $875 million in June.
- The exchange rate disparity between the official NAFEX rate and the black-market rate is still as wide as N89.17. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window). The wide disparity between the 2 rates has created huge arbitrage opportunities for some highly connected individuals.
Exchange rate unification remains on the cards and yet to be implemented weeks after the central bank governor confirmed it will be executed.
The foreign exchange market appears to be getting used to the recent adjustment of the official exchange rate by the Central Bank of Nigeria.
The naira has been under pressure in recent weeks in a forex market that has been experiencing low activity due to serious dollar shortages. Businesses which have been negatively impacted by this shifted their forex demand to the black market.