Forex turnover dropped by 65%, as the Naira’s exchange rate at the NAFEX window remained stable against the dollar to close at N390.25/$1 during intra-day trading on Monday, November 30.
Also, the Naira remained stable at over 3-year low against the dollar, closing at N500/$1 at the parallel market on Monday, November 30, 2020, as the CBN amend the procedures for receipt of diaspora remittances in an apparent attempt to improve liquidity in the forex market and reduce the disparity between the black market and official market.
Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N500/$1 on Monday.
This was the same rate that it exchanged for on Friday, November 26.
- 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.
- However, the gains appear to have been completely erased with the recent crash of the exchange rate.
- The CBN has sold over $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.
- Despite the CBN intervention, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.