The Nigerian Naira gained against the United States Dollar on Monday after falling to a record low of N422 per US dollar on Friday at the official forex window.
The local currency opened at N414.46 to a United States Dollar, a 0.15 percent improvement from Friday’s closing price.
Naira dropped as low as N425 to a United States Dollar at the spot forex market and to N429.50 at the forward forex market before closing at N414.73 to a United States Dollar at the spot forex market. Forex traders traded $172 million at the official forex window on Monday.
Forex scarcity across key foreign exchange segments and the decision of the central bank of Nigeria to halt the sale of forex to Bureau de Change operators continue to impede forex access in Africa’s largest economy.
Vice President Osinbajo had suggested that the apex bank should look to adopt a new forex policy to better close the gap between the black market and official rates. At the unregulated black market, traders are selling at N570 to US dollar.
This, the Vice President said was what was sustaining the black market.
“For context, the Vice President’s point was that currently the Naira exchange rate benefits only those who are able to obtain the dollar at N410, some of who simply turn round and sell to the parallel market at N570. It is stopping this huge arbitrage of over N160 per dollar that the Vice President was talking about. Such a massive difference discourages doing proper business, when selling the dollar can bring in 40% profit!, stated Laolu Akande, Senior Special Assistant to the President on Media & Publicity, Office of the Vice President.
“This was why the Vice President called for measures that would increase the supply of foreign exchange in the market rather than simply managing demand, which opens up irresistible opportunities for arbitrage and corruption.”
Naira Faces Temporary Stability at the Official Window
After closing at N415.07 on Wednesday, the currency temporarily rose to open at N413.58 per dollar on Thursday, before returning to close at N415.07 per dollar by the end of the day. This is according to the data obtained from the Investors and Exporters window.
The last few days have seen the emergence of marginal changes in the value of the Naira against the dollar, with the changes not being more than N1 or N2 at a time. The constant flux of the Naira at a marginal rate seems to suggest that the currency will remain at this level over the upcoming festive period.
This could however be changed, but only by drastic action on the part of the Central Bank of Nigeria.
The FMDQ website shows the Spot rate and Forward rate of the Naira, with the Spot rate representing the range of prices at which the Naira traded throughout an entire day. For Thursday, the Naira traded between N406 per dollar and N452 per dollar.
This means that all the dollar transactions that took place across Thursday took place with the Naira trading at a high of N406 per dollar and at a low of N452 per dollar. However, at the end of the day the Naira had settled down at N415.07 per dollar.
The Forward rate refers to the value of the Naira against the dollar which applies to transactions which have been agreed to take place in the future, and not immediately. Thursday’s forward rate was particularly low, with its highest coming at N452.61 per dollar, and the lowest falling in at N453.75 per dollar.
This could particularly discourage individuals or groups who would have been seeking to agree on some future deals on Thursday, with the low prices not spelling positivity for trade.
The turnover of the dollar recorded on Thursday sat ta $98.07 million, meaning that the entirety of the dollar traded across all the rates amounted to a little less than $100 million.
Naira Goes Back to N415/$1 at the Official Market
The Nigerian currency continued its run of marginal changes against the dollar, returning to close at N415.07 per dollar on Wednesday. This is according to the Official Investors and Exporters window where the Naira is traded officially.
The last time the Naira closed at the same amount which it did the previous day was last week, when it closed at N415 per dollar for two straight days. Since Friday, the currency has been changing in value, but the changes have only been marginal.
So far, the Central Bank of Nigeria is yet to take any drastic action which could catapult the Naira into a position where it is stable and good for the economy.
The FMDQ group released on its website the rates at which the Naira traded against the dollar on Wednesday. This is also regarded as the Spot rate. The Spot rate rose to a high of N405 per dollar, but fell only to N432 per dollar.
This is much better than the N450 per dollar lowest which it recorded on Tuesday. It also means that throughout the entire day, all transactions involving the Naira and the dollar traded between N405 and N432, before settling to close at N415.07 per dollar.
The Forward rate however maintained its stance from the past two days, rising only to N411 per dollar and falling to N453.50 per dollar. For all transactions which were agreed to take place in the future, the Naira traded between N411 and N453 per dollar.
The FMDQ group also stated on its website that the total volume of the dollar which was traded on Wednesday rested at an amount of $243.34 million, which is an increase of nearly a hundred million dollars from the total turnover recorded on Tuesday.
The official Central Bank of Nigeria website paints a picture of stability, as the Naira still maintains the N411 per dollar price which it has sat at for over two months.
Naira Maintains Marginal Streak at Official Fx Window
The Nigerian currency continued its streak of marginal changes in value against the dollar, settling to close at N414.80 per dollar by the close of business on Wednesday. This means that the Naira had only a 0.10% appreciation. This is as seen on the Investors and Exporters window where the Naira is traded officially.
For the last few days, all the changes which have been occurring in Naira’s exchange rate have been marginal, making it unlikely for these changes to be regarded as significant to the development and stability of the country’s economy.
As mentioned in a previous article, any actions that the government and the apex bank of the country are to take to correct this economic position will have to be spectacular.
When looking at the Spot and Forward rates posted on the FMDQ group’s website, it can be said that there is an air of stability around the currency with a little bit of marginal change.
On Wednesday, the Spot rate traded at a high of N404 per dollar, which is more of its usual price. For its lowest rate, it fell as low as N450.50 per dollar, which is not the most common (lowest) price at which it has traded in past weeks but is still N3 better than the lowest price recorded on Tuesday, which is N453.10 per dollar.
The forward rate however showed even more stability, with the prices remaining the same as the prices recorded on Tuesday. It rose as high as N411 per dollar and fell to as low as N453 per dollar.
According to the FMDQ group, the total amount of the dollar which was used across all transactions amounts to $279 million. This was higher than Monday’s turnover which sat at $149.53 million.
At the black market, the Naira took another dip on Wednesday. In Uyo’s black market, the Naira traded as low as N559 per dollar while trading at N560 per dollar at the Abuja black market.
This was another fall in the parallel market exchange rate, which had fallen to N555 per dollar on Tuesday.
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