The exchange rate between the naira and the US dollar appreciated to N669/$1 on Tuesday, morning from N692.25/$1 recorded on Monday, 1st August 2022. This is according to information gathered from cryptocurrency peer-to-peer exchange (P2P) markets.
Naira, which depreciated significantly above N700/$1 in the previous week retracted its movement on Tuesday, gaining 3.36% to trade at a minimum of N669 to a dollar. Similarly, at the parallel market, the dollar is sold for an average of N670/$1, while the traders buy for an average of N670/$1 indicating a margin of N40 for every dollar.
The sustained scarcity of FX across the country saw the exchange rate fall drastically in the past week, hitting a record high of N718/$1 on Friday, 29th July 2022 according to information from black market traders.
BDC operators have attributed the significant exchange rate hike in the past week to lack of forex as well as panic buying by Nigerians. Recall, that Nairametrics reported that Nigerian importers are desperate to pay for dollars at any price due to the sustained FX scarcity.
The exchange rate volatility comes at a time when Nigeria is facing high inflationary pressure which stood at 18.6% in the month of June 2022, due to surge in energy and food prices. The Central Bank raised interest rate by 100 basis points in July 2022 to 14%, the highest since February 2019, in a bid to curb the rising cost of goods and services.
Official exchange rate also gained on Monday
- The official exchange rate also appreciated by 0.03% on Monday, closing at N428.88/$1 compared to N429/$1 recorded in the previous trading session.
- The exchange rate at the Investors and Exporters window had hit a record high last week at N431/$1, however, further injection of FX in the market saw the rate moderate to N428.88/$1.
- On Monday, 1st August 2022, a total of $60.27 million exchanged hands, a 1.14% increase compared to $59.59 million traded in the previous session. In the week ended 29th July 2022, a sum of $463.23 million was traded as against $840.5 million that exchanged hands in the previous week.
Why this matters
- The appreciation of the local currency against the US dollar will come as a relief for Nigerians, individuals and businesses alike as the surge in the exchange rate has placed a huge burden on business operating expenses, with, importers willing to pay any rate just to obtain FX.
