Nigeria’s exchange rate at the NAFEX window depreciated to close at N386 during intraday trading on Tuesday, September 1, 2020. In sharp contrast, the exchange rate at the parallel market recorded another record gain on Tuesday as it closed at N440/$1.
Parallel Market: At the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N440/$1 on Tuesday, according to information from Abokifx, a prominent FX tracking website. This represents a N25 gain when compared to the N465/$1 that it exchanged on Monday, August 31.
Nairametrics Research checks reveal despite offering a bid price some traders fail to turn up to to buy leaving sellers stranded.
NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N386/$1.
- This represents a 33 kobo drop when compared to the N385.67 that it exchanged on Monday, August 31, 2020.
- The opening indicative rate was N386.03 to a dollar on Tuesday. This represents a 47 kobo gain when compared to the N386.50 to a dollar that was recorded on Monday.
- The N395.13 to a dollar is the highest rate during intraday trading before closing at N386. It also sold for as low as N380/$1 during intraday trading.
Forex Turnover: Forex turnover at the Investor and Exporters (I&E) window rose significantly by 307% on Tuesday, September 1, 2020, as it continued with the gain that was recorded the previous trading day.
- According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $14.37 million on Monday, August 31, 2020, to $58.46 million on Tuesday, September 1, 2020.
- This represents a second consecutive trading day of increase in turnover following improved dollar liquidity.
- Despite improved liquidity, the volatility of the foreign exchange market still persists. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
- The average daily forex sale for last week was about $23.19 million which represents a significant drop from the $71.13 million that was recorded the previous week. The day’s FX turnover is still a far cry from the $200 million mark that was recorded sometime 2 weeks ago.
- Total forex trading at the NAFEX window in the month of August was about $857 million compared to $937 million in July.
- The exchange rate disparity between the official NAFEX rate and the black-market rate has continued to reduce significantly these past few days dropping to N54.
The central bank moved towards exchange rate unification three weeks ago after it devalued the official rate to N380/$1.
The local currency has been strengthened especially in the black market as the Central Bank of Nigeria introduces some measures targeted at exporters and importers in order to try to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.
The resumption of sales of forex to BDCs will inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.