Naira gains 6.58% (N742.93) against dollar at I&E window; depreciates Wednesday to N830 at the parallel market
At the Investors’ and Exporters’ (I&E) forex window, the naira gained 6.58 percent as the dollar was quoted at N742.93 on Tuesday as against N795.28 quoted on Monday, data from the FMDQ indicated.
The naira appreciation was helped by increased dollar liquidity from willing sellers and willing buyers who participated at the I&E FX market auction on Tuesday.
Consequently, the daily foreign exchange market turnover increased significantly by 352.35 percent to $156.29 million on Tuesday from $34.55 million recorded on Monday.
However, the foreign exchange market opened on Wednesday with naira depreciating to N830 at the parallel market, popularly known as black market.
Nigeria’s official currency exchange rate is once again widening a gap with the parallel-market rate, shrugging off a brief convergence spurred by central bank actions.
The market closed at the same rate on Tuesday, from an average rate of N825 per dollar during morning trading on the same day.
Traders attributed the naira depreciation to strong demand for dollars by individuals and importers.
Recall in June 14, 2023, the CBN abolished segments of the official FX market to the I&E Window, where the “willing buyer and willing seller” was re-introduced. Based on this adjustment, the official rate rose from N463.38/$ to N830, the current rate.
The forex reforms were a key demand of investors and multilateral institutions including the World Bank.
But the removal of the currency peg has so far failed to eliminate a backlog of dollar demand, forcing businesses to turn to unofficial sources.
That’s undermining the central bank’s effort to close the gap between the official and black-market rates.
The central bank had initially said that it would allow the currency to trade freely until it finds its new market-related level.
But traders say its been intervening in the market to prevent sharper losses for the currency, amid concerns a weaker exchange rate would fuel inflation as witnessed after petrol price surged Tuesday largely attributed to the depreciation of the currency.
