Nigeria’s local currency has appreciated against the U.S Dollar despite the uncertainty of the foreign exchange market, going for N386.50 to a dollar at the Investors and Exporters (I&E) window.
The local currency strengthened by N0.20 against the dollar, when compared to the N386.70 to a dollar that it traded on Thursday, June 4, 2020.
Available information from the daily trading at FMDQ (where FX is traded by importers and investors) shows that the naira improved against the dollar by N1.25, closing at N386.50 to a dollar, as against the indicative rate of N387.75 to a dollar that it opened with on Friday.
A cursory look at the data from the FMDQ shows that the turnover for the day went up by about 358% at $112.89 million. This is against the $24.64 million turnovers that was recorded on Wednesday, June 3.
The performance of the naira at the I&E window, however, seems to contrast with that at the parallel market where the local currency lost N3 to a dollar as it depreciated to N450 to a dollar on Friday as against the previous day’s rate of N447 to a dollar.
The Central Bank of Nigeria had promised to provide more liquidity in the foreign exchange market, especially for genuine users while also discouraging currency speculators from heating up the market.
The apex bank on Friday debited the accounts of 25 commercial banks with the sum of N460 billion naira ($1.2 billion) as additional cash reserves for missing cash reserve ratio (CRR).
Apart from serving as penalty to the banks, this also reduces the excess cash in the money market which might be used to put further pressure on the foreign exchange market.