Nigeria’s exchange rate at the NAFEX window depreciated at N386.25 during intraday trading in the early hours of Friday September 4, 2020, representing a 25 kobo when compared with the N386 to a dollar recorded on Thursday.
The opening indicative rate was N386.48 to a dollar on Thursday. This represents a 40 kobo drop when compared to the N386.08 to a dollar that was recorded on Wednesday.
The N387 to a dollar is the highest rate during intraday trading before closing at N386.25. It also sold for as low as N380/$1 during intraday trading.
At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N440/$1 on Thursday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Wednesday, September 2.
However, forex traders on the average offered to buy dollars at an exchange rate of N425/$1 compared to N420/$1 on Tuesday.
The CBN moved towards exchange rate unification last month after it devalued the official rate to N380/$1.
The local currency has been strengthened especially at the black market as the Central Bank of Nigeria introduces 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 resumption of sales of forex to BDCs will inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
However, the BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders as it was inadequate to meet their expenses.
Meanwhile, forex turnover at the Investor and Exporters (I&E) window increased by about 139.7 per cent on Thursday, September 3, 2020, after the previous trading day drop in turnover.
Despite improved forex supply the volatility of the foreign exchange market still persists. 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 $23.19 million which represents a significant drop from the $71.13 million that was recorded the previous week. The day’s FX turnover is still a far cry from the $200 million mark that was recorded some 2 weeks ago.
Total forex trading at the NAFEX window in the month of August was about $857 million compared to $937 million in July.