In a notable uptick, the Investor & Exporter forex window experienced a substantial increase in the volume of dollars traded, reaching $123.25 million on Monday. This marked a 46.69% surge from the previous trading day when the turnover was $84.02 million, according to data from the FMDQ OTC Securities Exchange.
Despite the surge in trading volume, the Nigerian naira faced a depreciation of 1.96%, closing at N795.41/$ on Monday, compared to N780.14/$ at the end of Friday’s trading session. Trading opened on Monday at N780.83/$, reflecting the fluctuating nature of the foreign exchange market.
During Monday’s trading, the naira experienced a wide range, trading as high as N1099/$ and as low as N701/$. Meanwhile, on the parallel market, the naira continued its decline, depreciating by 4.55% to N1,150/$ from N1,100/$ on Friday.
Bureau de Change operators provided insights into the dynamics of the parallel market. One operator, Awolu, mentioned buying at N1,110/$ but selling at N1,150/$. Another trader, Kadir, indicated a selling rate of N1,150/$ and a buying rate of N1,170/$.
The depreciation of the naira follows the Central Bank of Nigeria’s decision in June to allow a more flexible exchange rate on the official Investor & Exporter forex window. Prior to this policy shift, the naira traded at 471.67/$ on the FMDQ official market and 765/$ on the parallel market in June.
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Recent information from the Economist Intelligence Unit (EIU) suggests that the naira is expected to close 2023 at N810/$ on the official market. The EIU’s country report highlights the CBN’s return to guiding the exchange rate by restricting access to foreign exchange sales for banks and dealers deviating from a preferred rate, contributing to ongoing pressure on the naira. The report also notes challenges such as deeply negative short-term real interest rates that require a more orthodox monetary policy, which authorities have yet to fully embrace. Despite a floated currency in June, the EIU anticipates the persistence of interventionist measures over 2024-28.
