The exchange rate of the naira against the US dollar reached a two-month intra-day high of N851/$1 on September 26, 2023, in the Investor and Exporter (I&E) window, the official platform for forex trading.
This peak was noteworthy because the last time the naira traded for a higher intra-day rate was on July 24, when it hit N855/$1.
On the same day, the market turnover swelled to $135.9 million, significantly up from the $64 million logged just a day prior.
Contrastingly, despite experiencing depreciation in the black market, the exchange rate in the official I&E window actually showed signs of improvement. It appreciated to N755/$1, a marked improvement from the previous day’s closing rate of N773.25/$1.
On the flip side, the parallel market, often seen as a barometer for economic sentiment, told a less rosy story. The exchange rate there plummeted to an unprecedented low of N1000/$1 on the same day.
This decline coincided with the Senate’s confirmation of Dr. Yemi Cardoso as the new Governor of the Central Bank of Nigeria (CBN).
This evolving scenario has further widened the disparity between the official and parallel market rates, which now stand at a staggering N245/$1 and continue to rise.
Such a significant gap is sparking fears of potential foreign currency roundtripping, where money is exchanged through unauthorized channels to exploit the rate difference.
Sources within the financial sector who spoke to Nairametrics underscored the potential vulnerability the wide gap poses for forex stability in the country, suggesting that forex roundtripping could well be taking place.
One of our sources suggests that currency roundtripping may be a significant contributor to the existing market distortions, further exacerbating the scarcity of the dollar and the escalating Naira-to-Dollar rate witnessed in the FX market.
This scarcity, in turn, poses challenges for legitimate businesses seeking access to foreign exchange for essential transactions.
Meanwhile, the Senate confirmed the nomination of Dr. Olayemi Cardoso as the next Governor of the Central Bank of Nigeria (CBN).
This follows the screening by the Upper Chambers of the National Assembly. The Senate also confirmed the nomination of the four Deputy Governors of CBN.
The four deputy governors whose appointments were confirmed by the Senate are Emem Usoro, Muhammad Dattijo, Philip Ikeazor, and Bala Bello.
