Exchange rate stabilizes at the black market as dollar supply hits record low
- 11th August 2020
- Posted by: Hakeem
- Category: Currencies
Nigeria’s exchange rate at the NAFEX window appreciated to N385.50 during intraday trading on Monday, August 10, 2020. In another development, the exchange rate at the parallel market remained stable on Monday as it closed at N475/$1 after exchanging as high as N485/$1.
- Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N475/$1 on Monday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Friday, August 7.
NAFEX: The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N385.50/$1.
- This represents a 50 kobo gain when compared to the N386 rate close that was reported on the last trading day, Friday, August 7.
- The opening indicative rate was N386.17 to a dollar on Monday. This represents a 62 kobo drop when compared to the N385.55 to a dollar that was recorded on Friday.
- The Naira fell to as high as N386 during intraday trading before strengthening to the closed rate of N386. It also sold for as low as N384/$1 during intraday trading.
Forex is sold at several prices and at different times during the day.
Forex Turnover: Meanwhile, forex turnover at the Investor and Exporters (I&E) window recorded a massive decline on Monday, August 10, 2020, as it dropped by 95.7% day on day.
- According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $92.22 million on Friday, August 7, 2020, to a record low of $3.97 million on Monday, August 10, 2020.
- The forex turnover for the day fell to a record low after a decent supply the previous trading day. This just as dollar supply has remained very weak.
- The average forex sale for last week was about $50.6 million which is an improvement on the $32 million that was recorded the previous week. FX turnover hit a record low of $3.97 million after a few days of decent volume and is a far cry from the over $200 million turnover that was recorded in January.
- Total forex trading at the NAFEX window in the month of July was $937 million compared to $875 million in June.
- The exchange rate disparity between the official NAFEX rate and the black-market rate is still as wide as N89.5. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window). The wide disparity between the 2 rates has created huge arbitrage opportunities for some highly connected individuals.
Exchange rate unification remains on the cards and yet to be implemented weeks after the central bank governor confirmed it will be executed.