Nigeria’s exchange rate at the NAFEX window appreciated to N389.25 during intraday trading on Wednesday, July 29th 2020. In contrast, the exchange rate at the parallel market remained unchanged for the second day in a row after hitting a new low on Monday, July 27th when it closed at N475/$1.
Market Watch
The Naira remained unchanged yesterday against the Dollar, to close at N475/$1, 29th July 2020, for the second consecutive day at the black market, where forex is traded unofficially, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Tuesday, July 28.
However, wired transfers cost as high as N477/$1 an additional N2 premium. Wired transfers represent non cash forex transactions between a buyer and a seller without going through the official channels. Wired transactions occur through bank accounts and usually cost more.
NAFEX: The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N389.25/$1. This represents a 25 kobo gain when compared to the N389.50 rate close that was reported on Tuesday, July 28. The opening indicative rate was N388.61 to a dollar on Wednesday. This represents a 17 kobo drop when compared to the N388.44 to a dollar that was recorded on Tuesday.
The Naira fell to as high as N392.50 during intraday trading before strengthening to the closed rate of N389.25. It also sold for as low as N380/$1 during intraday trading. Forex is sold at several prices during the day.
The 0.4% depreciation week on week (it was N388.5/$1 coming into last week) is perhaps attributed to the weaker forex turnover that was experienced last week.
Exchange rate disparity
The exchange rate disparity between the official NAFEX rate and the black-market rate remained wide on Tuesday staying as wide as N85.75. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window).
Exchange rate unification remains on the cards and yet to be implemented weeks after the central bank governor confirmed it will be executed.
The minister of Finance also admitted that Nigeria was seeking unification of its forex Windows, a move thought to be in line with the requirements from the World Bank. Nigeria is seeking a world bank loan of up to $3 billion. The country has been under pressure from the International Monetary Fund and the World Bank for currency reforms.
