Naira remains stable at Parallel market, strengthens at I&E window

Nigeria’s currency sold at N450 to $1 on Friday at the parallel market, and has remained at this rate for the past six working days, refusing to breach the N450 support levels.

The stability of the naira is reinforced by the country’s foreign reserves, which have remained relatively stable at around $36.5 billion as at Thursday.

Nigeria’s central bank, some weeks ago, resumed dollar sales to individuals and businesses with genuine needs, selling around $100 million per week, though it is yet to resume selling to foreign-based investors; it had scrapped a planned auction due to lockdown measures to slow the COVID-19 pandemic.

The Central Bank of Nigeria (CBN) stated recently that it would use all the monetary tools it had to rescue the Nigerian economy from the fallouts of the COVID-19 induced global economic strain, and stabilize the naira. It had also taken some concrete steps to tackle currency speculators.

Meanwhile, the naira appreciated to N385.75 to a dollar at the I&E forex window, after the day’s trading session. It gained N1.19 against the dollar, when compared to the N386.94 to a dollar that it exchanged on Wednesday, June 10, 2020.

The exchange rate at the I&E window is different from the Central Bank of Nigeria’s published exchange rate, which currently stands at N360/$1. This is also different from the exchange rate at the parallel market, which was stable at N450 to a dollar, according to information on AbokiFX, as of Thursday.

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 N1.75, closing at N385.75 to a dollar, as against the indicative opening rate of N387.50 to a dollar that it opened with on Thursday morning. The opening indicative rate on Thursday also represents a loss of N0.54 when compared to the N386.96 that it opened with on Wednesday.

A cursory look at data from the FMDQ shows that the turnover for the day witnessed a significant drop by about 80% at $12.45 million, when compared with the $62.28 million that was recorded the previous day.