• Thursday, February 29, 2024
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Naira closes at N710 to dollar on rising demand

Dollar nears N1,500 as scarcity hits black market

The pressure on foreign exchange continued on Thursday as the Naira depreciated by 0.28 percent against the dollar at the parallel market.

After trading on Thursday, the dollar was quoted at the rate of N710 compared to N708/$ quoted on Wednesday.

“Demand was higher today that is why the dollar was high”, a trader said on Thursday.

The naira is likely to appreciate at the parallel market towards N670/$ -N680/$ in October 2022, according to Bismarck Rewane, managing director/chief executive officer of Financial Derivatives Company Limited.

At the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange market, Naira strengthened marginally by 0.04 as the dollar was quoted at N436.33 on Thursday as against N436.50 closed on Wednesday, data from the FMDQ indicated.

The Naira slight appreciation at the official market was helped by increased activity at the I&E window as the daily foreign exchange market turnover increased to $118.20 million on Thursday.

Read also: Another CBN rate hike expected as inflation hits 20.52%

Most foreign exchange dealers who participated at the foreign exchange auction on Thursday maintained bids at between N438.45 (high) and N420.50 (low).

Foreign reserves rose marginally to $39.22 billion by end-June 2022, from US$38.60 billion at the end of May 2022.

The increase according to Festus Adenikinju, a member of the Monetary Policy Committee (MPC), was due to rise in foreign exchange swap transactions, increase in third party receipts and increase in crude oil related taxes and penalties.

Balance of Trade and current account balances also rose due to the favourable price of crude oil, net inflow of remittances and decline in imports.

“Unexpectedly the naira appreciated in the I&E windows at a time when currencies across the globe are depreciating against a strong dollar. It is also unexpected at a time the huge demand for dollars in the commercial banks outstripped supply,” he said in his personal statement at the last MPC meeting in July 2022.

Rewane said the CBN is likely to allow an adjustment at the I&E window towards N440/$ and that the CBN will increase forex supply at the window.

The World Bank said in June 2022 that allowing further gradual adjustment in the Investors and Exporters Foreign Exchange (IEFX) rate, where the CBN manages the price, would help eliminate misalignment and alleviate persistent FX pressures.