Forex turnover dropped by 31.5%, as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intra-day trading on Monday, November 23.
Also, the naira appreciated marginally against the dollar, closing at N483/$1 at the parallel market on Monday, November 23, 2020, as ABCON warns forex speculators against forcefully pushing for the devaluation of the naira to aid their illegal activities.
This is also as demand pressure increases as importers stock up goods ahead of Christmas sales.
The CBN, a few days ago relaxed its earlier policy on banning third parties from having access to foreign exchange routed through Form M.
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 N483/$1 on Monday.
This represents an N1 gain when compared to the N484/$1 that it exchanged for on Friday, November 20.
- The local currency had strengthened by about 7.8% within one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers.
- This is to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.
- The CBN has sold about $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.
- This was expected to inject more liquidity into 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.
