The foreign exchange pressure continued on Friday as Nigeria’s currency weakened by N0.67k against the dollar on the black market, due to increased demand amid a shortage.
Some foreign exchange end-users, whose demands are not being met at the official market, go to the autonomous market to source for dollar.
“We are now looking to buy forex from the parallel markets and you know the rate at which parallel markets go, Sam Ohuabunwa, President of the Pharmaceutical Society of Nigeria ( PSN), said while speaking on the CBN’S N100 billion Health Sector Intervention fund at a virtual conference organised by Finance Correspondents Association of Nigeria (FICAN) in Lagos on Tuesday.
Consequently, the dollar traded at an average rate of N462.67k on Friday as against N462.00k traded on Thursday on the black market.
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Investigation across Lagos streets where the black market operators transact business show that the dollar traded at N462 in Festac Town, while at Apapa and Eko Hotel, it traded at N463.
Naira remained stable at N462 and N386 against the dollar on Friday at the Bureau De Change (BDC) segment and at the Investors and Exporters (I&E) forex window.
The foreign exchange turnover increased significantly by 536.75 percent to $150.02 million on Thursday from $23.56 million recorded on Wednesday, data from the FMDQ show.
The turnover of transactions at the window amounted to US$64.86 billion at the end of December 2019, compared to US$59.94 billion in the corresponding period of 2018. The increase in the turnover was a result of increased inflows to the country. From inception in mid-2017, the turnover of transactions amounted to US$148.72 billion, at the end of December 2019, according to the annual activity report of the financial market development released on Thursday by the Central Bank of Nigeria (CBN).
In 2019, the Bank sustained its direct intervention in the inter-bank foreign exchange market by providing a buffer against demand pressures to ensure exchange rate stability.
Total sales stood at US$23,885.01 million, comprising US$13,102.65 million as spot and $10,782.36 million forwards. The spot sales comprised US$6,038.40 million at the I&E window, US$4,267.16 million at the inter-bank, US$1,674.00 million for SMEs and US$1,123.10 million for Invisibles.
On the other hand, the Bank purchased US$11,043.78 million. Thus, net sales by the Bank amounted to US$12,841.23 million. The sum of US$10,078.01 million matured at the forwards, while US$3,481.64 million remained outstanding at the end of December 2019.
In the preceding year, total sales stood at US$25,676.77 million, comprising US$14,622.25 million as spot and US$11,054.52 million as forwards, while purchases amounted to US$7,802.77 million, resulting in a net sale of US$17,874.00 million. The sum of US$10,400.43 million matured at the forwards, while US$2,760.51 million remained outstanding at end-December 2018.
The lower sales into the foreign exchange market by the CBN in 2019 was attributable to the increased level of activity at the I&E window.
The exchange rate at the inter-bank market remained relatively stable in 2019 due to sustained liquidity in the market. At the inter-bank segment, the rate opened at N306.95/US$ on January 2, 2019, and closed at N307.00/US$ at end-December 2019. The monthly average exchange rate opened at N306.85/US$ in January 2019, depreciating marginally to close at N306.95/US$ in December 2019. In 2018, the rate opened at N306.00/US$ on January 2, 2018, and closed at N307.00/US$ at end-December 2018. The monthly average exchange rate opened at N305.78/US$ in January 2018, appreciating marginally to N305.61/US$ in April 2018 and depreciating to N306.92/US$ in December 2018.
