The exchange rate between the dollar and naira at the investor and exporter window sold for as high as N840/$1 on June 26th, 2023 sending jitters to currency watchers.
This is the highest rate traded for the dollar on the official market since we started tracking records in 2018 when the window was launched. The last highest intra-day high was N815/$1.
The exchange rate however closed at N768.17/$ at the close of business on Wednesday depreciating from N770.17/$1 recorded a day earlier.
Africa’s largest economy, Nigeria adopted a market-driven exchange rate policy two weeks ago leading to a sharp depreciation of the exchange rate from about N471.67/$1 to an average of N765/$1.
In terms of turnover, the I&E window recorded volumes of $198.13 million on Monday, 26th of June 2023. Total turnover since the revised I&E window was launched is about $1.4 billion.
Price discovery: However, the intra-day highs and lows often signify the price discovery dynamics as the interplay between demand and supply continues to dictate prices.
- The exchange rate has oscillated between N750/$1 and N770/$1 in the last week while hitting multiple intra-day highs.
- Nairametrics reported last week that the central bank intervened in the market, selling $29 million at an exchange rate of about N765/$1.
- Recent trading data also indicates the average exchange rate since this started is around N744.8/$1 in the last 8 days.
Optics: The spikes in intra-day exchange rate highs are sending jitters to traders and currency watchers as the price discovery process continues.
- Some analysts have suggested the real value of the exchange rate is between N650-N680/$1 and not the parallel market exchange rate of N765-N770/$1.
- Others also opine the rapid pace of inflation rate in the country may also be a major concern for forex liquidity and maintaining a stable exchange rate
