Naira drops at the parallel market despite gaining at I&E forex window

The naira was strengthened on Wednesday as it appreciated to N386.94 to a dollar at the Investors and Exporters (I&E) window, after the day’s trading session. The local currency gained N0.14 against the dollar, when compared to the N387.08 to a dollar that is traded on Tuesday, June 9, 2020.

The exchange rate at the I&E window is different from the Central Bank of Nigeria’s published exchange rate, which currently stands at N360/$1. This is also different from the exchange rate at the parallel market, which depreciated to N450 to a dollar, according to information on AbokiFX as of Wednesday, June 10, 2020.

Available information from the daily trading at FMDQ (where FX is traded by importers and investors) shows that the naira improved against the dollar by N0.02, closing at N386.94 to a dollar, as against the indicative rate of N386.96 to a dollar that it opened with on Wednesday morning. The opening indicative rate on Wednesday also represents a loss of N1.01 when compared to the N385.95 that it opened with on Tuesday.

A cursory look at the data from the FMDQ shows that the turnover for the day witnessed a significant jump by about 96% at $62.28 million.

However, the situation at the I&E forex window seems to contrast with that at the parallel market as the local currency lost N2. The naira, on Wednesday, June 10, 2020, depreciated to N450 to a dollar at the parallel market otherwise known as the black market as against the N448 to a dollar that it exchanged the previous day.

The depreciation of the naira at the black market can be attributed to the pressure on the foreign exchange market despite the Central Bank of Nigeria’s efforts to boost the local currency.

The naira was reported to have strengthened at the future market by N6 thereby hitting N578.37 for 5-year forward on Wednesday, June 10, 2020, as against the N584.11 to a dollar that it was last week.

The CBN has been intervening in the foreign exchange market although the current daily turnover of $62.28 million on the over the counter spot market is a far cry from around $300 million a day that it was last year.


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