Naira Bounces Back as Dollar Exchanges Same Rate in Official and Black Markets First Time in 8 Years
- The naira to dollar exchange rate at the official and black markets met for the first time in eight years and closed at N756
- This followed the recent foreign exchange reforms embarked upon by the Central Bank of Nigeria (CBN)
- Kingsley Obiora, the CBN’s deputy governor, has further explained the ongoing operational reforms in Nigeria's foreign exchange markets
For the first time in eight years, the Nigerian currency closed at the same rate in official and unofficial foreign exchange markets.
Data obtained from FMDQ securities revealed that at the Investors and Exporters(I&E) window, which serves as the official exchange market, the naira closed trading at N756.61 on Tuesday, June 20, 2023.
This represents a 1.8% or N13.77 appreciation compared to the N770.38/$1 it traded on Monday, June 19.
Source: Getty Images
Despite the significant demand for foreign currencies in the official market, the Naira performed well on Tuesday.
PAY ATTENTION: Join Legit.ng Telegram channel! Never miss important updates!
Legit.ng observed that the value of foreign exchange transactions recorded on Tuesday increased by 72.3% or $56.44 million to $134.47 million, compared to $78.03 million traded on Monday.
Naira to dollar exchange rate at black market
The scenario was similar in the unofficial market, also known as the black market, as the Naira appreciated against the US dollar.
Traders who spoke to Legit.ng confirmed that the exchange rate for Naira to dollar settled at N756/$1, contrasting with Monday's rate of N759/$1.
However, in the Peer-2-Peer (P2P) segment, another unofficial market primarily for online traders, the local currency depreciated against the dollar by N4, quoting at N776/$1 compared to the previous day's value of N772/$1.
CBN explains ongoing FX reforms
Meanwhile, Deputy Governor Kingsley Obiora of the CBN has clarified the ongoing reforms in Nigeria's foreign exchange market.
In an interview with Bloomberg, Obiora explained that contrary to popular belief, the CBN currently operates managed naira float, not a free float.
He further stated that the managed float means CBN has relaxed control on foreign exchange markets.
He added:
"In the next couple of weeks, more adjustments will be introduced into the market."
Expert speaks
Reacting, Taiwo Oyedele, head of tax and corporate advisory services at PwC Nigeria, said the forex market is still volatile as it continues its journey of price discovery.
Also, Ayodele Akinwunmi, relationship manager, corporate banking at FSDH Merchant Bank Limited said:
“I think it is too early to conclude if the rates convergence will be sustained although that is the long term objective.
"All that is needed is to have enough forex supply, this will make the black market unattractive."
"It remains naira card": CBN lifts dollar deposit restriction on bank accounts
In another report, the CBN has removed the dollar cash deposit restrictions on domiciliary accounts that were put in place under the leadership of Godwin Emefiele.
The latest development will allow Nigerians unrestricted access to funds in their accounts.
The new policy changes are expected to enhance liquidity and stability in Nigeria's foreign exchange market.
Source: Legit.ng
