Naira gains 0.68% as demand moderates after holiday
Naira on Tuesday reversed 0.68 percent of its lost value, gaining N5 per dollar as demand moderated at the parallel market after the one-day public holiday to mark Nigeria’s independence celebration.
During the trading hours on Tuesday, naira was exchanging with the dollar for N735/$ compared to N740/$ on Thursday and Friday. “Demand has slowed a bit since Friday,” a trader told BusinessDay.
The Naira which fell to a record new low of N740 per dollar on Thursday has depreciated by N175 (23.65 percent) when compared with N565/$ at the beginning of the year.
Bismarck Rewane, managing director/chief executive officer of Financial Derivatives Company Limited had said naira is likely to appreciate at the parallel market towards N670/$ -N680/$ in October 2022.
Nigeria’s currency has been on a free fall as a result of rising strong dollar, import demand, oil theft, fuel subsidies, currency speculation, record high money supply and weak productivity, analysts have said.
In the face of rising demand for foreign exchange for both goods and services by Nigerians, the CBN has advised Nigerians to resist the urge of succumbing to the speculative activities of some players in the foreign exchange market.
Black market has gained more popularity up to the point of overshadowing the official foreign exchange market, a currency dealer said.
This has led to a lot of concerns as to who are the black market operators.
Black market operators are Nigerians who make a living through money exchange outside the purview of the regulator –the Central Bank of Nigeria (CBN). They speculate and profit from the premium between official and unofficial markets.
Godwin Emefiele, the Governor of the CBN, described the parallel market as “a tainted market in Nigeria, where people desire to deal in illegal foreign exchange transactions including sourcing of FX cash for purposes of offering bribes, corruption. That is where they deal.
At the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange market, the Naira remained unchanged at N437.03 per dollar on Friday. Most forex dealers who participated at the FX auction on Friday maintained bids between N425.00 (low) and N455.00 (high) per dollar.
In May 2021, the CBN adopted the I&E or Nigerian autonomous foreign exchange (NAFEX) window as the official FX market.
The adoption of the somewhat market driven exchange rate by the CBN was in response to the pressure from the International Monetary Fund (IMF) and the World Bank, which demanded a unification of exchange rate as a precondition for approval of $3.4 billion and $1.5 billion, respectively, loan request by the Nigerian government, last year