Trading on the foreign exchange (FX) market came to a close, and the results showed that the naira had depreciated by 1.41 percent versus the dollar on the parallel market, also known as the black market.
On Friday, one dollar changed hands at the rate of N930, which was higher than the N917 rate that was transacted at the beginning of the trading week on the black market.
According to economists, the continuous decline in the value of the naira followed a shortage of dollars brought about by poor inflows of funds from a variety of sources, including oil receipts, foreign capital, and remittances from Nigerians living abroad.
Information obtained from the FMDQ says the value of the naira increased by 4.53 percent on Thursday when compared to the value of the dollar as quoted at the currency window for investors and exporters (I&E). The dollar was quoted at N736.62 on Thursday, which was higher than the value of N744.97 quoted on Tuesday.
On June 14, 2023, the Central Bank of Nigeria merged all of the different divisions of the foreign currency markets into one single I&E forex window.
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The situation of the Naira
Festus Adenikinju, member of the Monetary Policy Committee (MPC) said: “Although the exchange rate has shown some volatility (depreciated from N435/1USD in May 2023 to N763/1USD as of July 11, 2023 and N780/1USD as of July 20, 2023), stability is expected over the medium term as efforts to ramp up export proceeds intensify, alongside anticipated decline in demand of imported refined petroleum products.”
According to him, the stability of the exchange rate is especially crucial because of the strategic role it plays in bolstering investor confidence and pass-through to domestic prices.
According to him, the current efforts that are being made to increase the supply of foreign exchange should thus be intensified as a more sustainable method to stabilising the foreign exchange market.
“Developments in the foreign exchange market are also important considerations for policy. The recent foreign exchange market reforms which have resulted in exchange rate convergence, would increase market transparency, and attract more foreign capital inflows,” he added.
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Previous fall of the Naira
The Nigerian naira fell to N927 per dollar despite the Central Bank of Nigeria‘s measures to remove FX backlog.
Despite the plans of the Central Bank of Nigeria (CBN) to clear the FX backlog in two weeks, the pressure on Nigeria’s foreign exchange (FX) persisted on Thursday, as the naira plummeted to N927 per dollar at the parallel section of the FX market. This occurred despite the CBN’s intention to clear the FX backlog in two weeks.
At the parallel market, the price of one dollar was stated at N927 during the intraday trade on Thursday. This was a decrease from the price of N917 that was quoted at the beginning of the week.
According to information obtained from the FMDQ, the value of the naira decreased by 3.57 percent on Wednesday as compared to the value quoted for the dollar on Tuesday, which was N744.97. This occurred at the currency window for investors and exporters (I&E).
On Monday, the Central Bank of Nigeria (CBN) made the announcement that it will collaborate with the nation’s banks to eliminate the FX backlog within the next two weeks.
This information was shared at a news conference in Lagos by Folashodun Adebisi Shonubi, who is serving as acting governor.