Naira exchanges for N740/$1 at official market, highest level in weeks

In a surprising turn of events, the Nigerian Exchange Rate on the Investors and Exporters (I&E) window closed at N740/$1, marking the highest level against the dollar since June 15th, when it concluded at N702/$1.

This substantial gain comes as a welcome relief for most forex buyers, as it represents a significant jump from the N791.2/$1 rate recorded just a day earlier and a major improvement from several days of weakness on the official window.

The market has witnessed an intra-rate high of N800/$1 and an intra-day low of N730/$1 during this period. Meanwhile, the NAFEX rate averaged N787.1/$1.

The past month has been characterized by exchange rate fluctuations, with values fluctuating between N770/$1 and N803/$1.

READ ALSO: Naira exchanges for N791/$1, N1110.2/£1 at official market

Adding to the improvements in data, the forex turnover for the day hit $153.2 million, a substantial increase from the $55 million recorded on the previous day.

Notably, this stands as the second-highest forex turnover since July 18, when it closed at $156.2 million, coinciding with an exchange rate of N742.9/$1.

Amidst the fluctuating official rates, the parallel market exchange rate painted a different picture, settling at N867/$1.

This stark difference between the official and parallel market rates has now exceeded N100/$1, raising concerns among analysts and policymakers alike.

The disparity points to potential challenges in controlling the exchange rate in a unified system.

The exchange rate has been on a rollercoaster ride ever since the exchange rate unification was initiated on the 14th of June 2023 with supply shortages driving volatility.

READ ALSO: Naira hits N792/$1 at official market, drops further against Pound Sterling

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This volatility has kept investors on their toes, trying to make sense of the rapidly changing landscape.

Meanwhile, the acting central bank governor, Fola Shonubi confirmed supply challenges were the reason behind the exchange rate volatility.

The acting governor acknowledged the prevailing volatility, which he says stems from pent-up demand that outpaces current supply.

“And also the reality that there is pent-up demand which current supply may not be sufficient for,” Shonubi said.