Naira fall persists despite 46% rise in dollar turnover

Yesterday saw a 46.69% increase in dollar volume traded on the Investor & Exporter forex window, reaching $123.25 million.

The official market experienced a dollar turnover of $84.02 million on Friday. On Monday, this climbed to $123.25 million. Despite this, data from FMDQ OTC Securities Exchange shows that the naira fell by 1.96 percent to N795.41/$ as of Monday’s close of trading, having closed at N780.14/$ on Friday.

The PUNCH says that yesterday’s trading ended at N795.41/$ after opening at N780.83/$.

The naira did, however, fluctuate for as high as N1099/$ and as low as N701/$ during trading. In the meantime, the naira was losing value on the black market, falling 4.55 percent to N1,150/$ from N1,100/$ it traded for on Friday.

Our correspondent was informed by a Bureau de Change Operator, only identified as Awolu, that he was purchasing at N1,110/$ but selling at N1,150/$. “If you want to sell, it’s N1,150/$ today,” said Kadir, another trader. It is available for purchase for N1,170/$.

After the Central Bank of Nigeria ordered in June to permit the free flow of the nation’s currency rate on the official Investor & Exporter FX window, the value of the naira has kept declining. Prior to this change, the naira was trading at 471.67/$ on the FMDQ’s official market and at 765/$ on the parallel market in June.

Nonetheless, fresh data from Economist Intelligence indicates that the naira is expected to end 2023 at N810/$ on the official market. This was revealed in the country report that was just published. According to the statement, the apex bank has gone back to controlling the exchange rate after floating the naira in June. This is done by preventing banks and other dealers that quote prices outside of a desired rate from having access to foreign exchange trades.

The EIU stated that the naira would continue to under pressure from this unfavourable monetary policy. Nonetheless, it stated, “The authorities have not shown a strong enough desire for an orthodox monetary policy, which is necessary given other factors weakening the naira, such as extremely negative short-term real interest rates. As a result, we do not anticipate a currency float to be successful between 2024 and 2028, while it appears likely that the fuel subsidy would stop in late 2024 when the Dangote refinery is equipped to replace imports.