Naira gains 6.77% despite liquidity drop at official market

Naira strengthened against the dollar at the official market, gaining 6.77 percent despite declined liquidity in the market on Wednesday.

At the close of trading on Wednesday the dollar was quoted at N790.68, which was weaker than N848.12 quoted on Tuesday at Investors’ andExporters(I&E) forex window, data from the FMDQ showed.

The daily foreign exchange (FX) market turnover, which reflects the level of transaction or inflows in the market declined by 47.96 percent to $69.88 million on Wednesday from $134.28 million recorded on Tuesday.

Currency dealers attributed the naira appreciation at the official market to slight moderation in demand for dollars amid shortage.

Falls to N1,100/$ on black market

At the parallel market, naira fell to all-time low of N1,100, per dollar at the close of trading on Wednesday, representing a 3.77 percent (N40) loss against N1,060/$1 quoted during morning trading on the same day.

This followed strong demand from end users who could not meet their dollar demand from the official market, according to one parallel market operator.

With the current rate, the exchange rate spread between the official and parallel market rate has widened further to N309.32 per dollar.

This represents over 100 percent (16,802.73%) compared to N1.83 exchange gap recorded on June 22, 2023, after FX reform.

Nigeria’s Central Bank on June 14, 2023 collapsed all segments of foreign exchange markets into the I&E forex window.

Read also: Why naira fell sharply across FX markets

Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, said FX liberalisation is expected to unlock the huge potentials for investment, jobs and capital flows, and investors’ confidence would be positively impacted.

The pressure on foreign exchange (FX) market intensified on Tuesday and Wednesday as naira fell to lowest across market segments on strong demand after the Central Bank of Nigeria (CBN)’s move for a single forex market rate.

Last week Thursday, the apex bank restored the 43 items prohibited from access to FX, eight years after, a move seen to usher in a single exchange rate.

Read also: Naira falls to average of N1,084/$ on increased demand

Naira depreciated sharply to N848.12 per dollar at the Investors’ and Exporters’ forex window on Tuesday, the lowest ever since the establishment of the window in 2017.