ON WEDNESDAY (5TH JULY) THE NAIRA STARTS AT AN EXCHANGE RATE OF N778.

The parallel market witnessed a 0.38 percent depreciation of the Naira against the dollar as the foreign exchange market opened on Wednesday.

During Wednesday morning trading, the dollar maintained a rate of N778, which was the same as the previous day’s closing rate but lower than the N775 rate observed during intraday trading on Tuesday.

According to a trader interviewed by BusinessDay, the current rate is subject to change later in the day based on demand pressure.

At the Investors and Exporters (I&E) forex window, there was a significant demand for dollars on Tuesday, with bids ranging from as high as N820/$ to a low rate of N700/$.

The volume of dollars traded in the market declined by 16.71 percent on Tuesday, totaling $73.86 million compared to the $88.68 million recorded on Monday.

As a result, the Naira depreciated by 3.50 percent against the dollar at the official FX market, with the dollar quoted at N768.44 on Tuesday compared to N741.50 on Monday, according to data from the FMDQ.

A World Bank report highlighted the comprehensive reform implemented in mid-June, addressing three critical distortions in the FX market: the lack of a price discovery mechanism, multiple FX windows, and institutional weaknesses such as transparency and predictability.

Starting from June 14, the Central Bank of Nigeria (CBN) initiated reforms by eliminating the segmentation of the FX market and consolidating it into the Investors & Exporters window. This allowed the Naira to trade more freely and introduced transparency in transactions.

As a result, the Naira experienced a significant single-day depreciation of 27 percent, dropping from N463 to N632/US$.

The report emphasized the importance of further improving the efficiency of the FX market by removing FX restrictions, clarifying the operation of the new FX regime, and implementing a supportive monetary framework guided by price stability for monetary policy actions.

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