Nigeria’s currency on Wednesday depreciated by N6.00k to an average of N466 from N460 as demand for dollar shifts from the official market to black market following the order by the Federal Government (FG) to the Central Bank of Nigeria (CBN) to not give access to forex for importation of food and fertilisers.
BusinessDay foreign exchange market survey show that dollar was trading at N465 in Festac Town, N466 at Lagos airport, and N467 at Apapa areas of Lagos State. Traders were buying from individual at the average rate of N462 on Wednesday.
The local currency dropped in value to as low as N468 during intraday trading but later firmed to N465 at the close of business, at the Bureau De Change (BDC) segment of the foreign exchange market.
At the Investors and Exporters (I&E) forex window, naira has remained stable since Monday, as the dollar was quoted at N386.00k on Wednesday, data from the FMDQ indicated.
The market opened with an indicated rate of N386.00k on Wednesday, which signalled a N0.50k appreciation when compare with N386.50k opened with on Tuesday at the I&E window.
Godwin Emefiele, governor of the CBN said on Tuesday that the band between the parallel market and the official exchange rate over the past month has narrowed recently due to some of the measures taken by the CBN to curb illegal FX transactions.
The CBN resumed dollar sales to BDCs on Monday September 7, 2020 and had supplied over $200 million to the BDCs. The Apex bank sells $10,000 twice weekly to this segment of the foreign exchange market.
The CBN had in August 27, 2020 circular said the purchase of foreign exchange by BDCs shall be on Mondays, and Wednesdays in the first instance. The BDCs are to ensure that their accounts with the banks are duly funded with the equivalent Naira proceeds on Fridays and Tuesdays accordingly.
The drop in crude oil earnings as well as the drop in foreign portfolio inflows significantly affected the supply of foreign exchange into Nigeria. In order to adjust for the decrease in supply of foreign exchange, the naira depreciated at the official window from N305/$ to N360/$ and to N380/$. These adjustments along with increased efforts to restrict undue speculative activities, has led to a growing unification of rates across all the foreign exchange market segments.
