The Naira depreciated marginally against the Dollar at the parallel market on Tuesday, closing at N461/$1 as against the N460 it went for at the closing of trading on Monday, October 12.
Recall that the Naira strengthened by about 7.8% within the last one week at the black market as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.
The CBN has sold over $450 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
However, the exchange rate against the dollar has failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.
BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.
There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure, and creates a volatile situation in the foreign exchange market.
However, the Naira remained stable against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N386/$1.
This was the same rate that it exchanged for on Monday, October 12.
The opening indicative rate was N386.38 to a dollar on Tuesday. This represents a 5 kobo drop when compared to the N386.33 that was recorded on Friday.
The N392.78 to a dollar is the highest rate during intraday trading before it closed at N385.83. It also sold for as low as N384/$1 during intraday trading
The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
The drop in forex supply reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.