Forex turnover rose significantly by 194.2% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intra-day trading on Friday, October 30.
Also, the naira appreciated against the dollar, closing at N462/$1 at the parallel market on Friday, October 30, 2020, as businesses open up after relaxation of the curfew initially imposed to curtail the widespread violence that followed the hijacked #EndSARS protests and also the public holiday to mark Muslim festival.
This is also as businesses shut down due to the outbreak of violence in Lagos and some parts of the country during the protests against the special anti-robbery unit (SARS) and police brutality by the Nigerian youths.
Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N462/$1 on Friday. This represents a N3 gain when compared to the N465/$1 that it exchanged for on Wednesday, October 28.
- The local currency had strengthened by about 7.8% within the one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.
- The CBN has sold over $500 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
- However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
- The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
- Despite the drop in speculative buying of foreign exchange, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.
NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Friday, closing at N386/$1.
- This represents a 33 kobo drop when compared to the N385.67/$1 that it exchanged for on Wednesday, October 28.
- The opening indicative rate was N386.63 to a dollar on Friday. This represents a 74 kobo drop when compared to the N385.89 that was recorded on Wednesday.
- The N393.44 to a dollar is the highest rate during intraday trading before it closed at N386 to a dollar. It also sold for as low as N383/$1 during intraday trading.