Naira depreciates by N38, closes at N702/$1

The naira depreciated by N38 yesterday, barely a day after the Central Bank of Nigeria (CBN) abolished multiple exchange rates. It closed at N702/$1 at the Investors and Exporters (I&E) window.

It was the local currency’s immediate response to market forces.

On Wednesday, a data from the FMDQ Group showed that the naira closed at N664/$.

But rate sheet posted on the CBN’s website showed N632.77/$1 for I&E window transactions, which could indicate lower limit transaction for the day.

The Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) also called I&E forex window, is a forex trading platform that allows dealers and investors to buy and sell dollars at a rate of their choice provided they can find buyers at such rates.

Two days ago, the CBN announced the collapse of all other rates – International Air Transport Association (IATA) rate, Interbank Exchange Rate and Bureaux De Change (BDC) rate into the I&E Window. The decision was in line with its rate harmonisation policy.

However, at the parallel market, the naira made a rebound to N750/$1 from N765/$1 it traded on Wednesday.

“The dollar to naira parallel market exchange rate is between N750 and N760 with an average of N755, according to two sell rates coming from the users in the comments section,” one trader posted on the Ngn

A Lagos-based forex dealer, Abdullahi Kamala, said many forex buyers were being cautious about where the rates will swing, and therefore trading cautiously.

He said a few high net worth individuals have brought dollars for sale, which enhanced dollar liquidity in the market.

Read Also: CBN abolishes multiple naira/dollar exchange rates

“As we see more people offload dollars in the parallel market, we expected the naira to continue to recover at the parallel markets,” he said.

The Chief Executive Officer (CEO) of Moniepoint, Tosin Eniolorunda, said the CBN’s decision to float the naira is a clear step in the right direction for our economy, ensuring investor confidence continues to grow.

“He said: The decision is good for business, jobs and growth. It will help Nigeria’s brilliant entrepreneurs to do business globally and attract foreign investment. It will also help reduce inflation, leaving more money in people’s pockets,” he said.

Under the suspended CBN Governor, Godwin Emefiele, the apex bank offered the United States (U.S.) dollar through several windows at tightly controlled rates, with little liquidity, to businesses and individuals.

That forced many to the black market, where the dollar traded more freely but at about a 60 per cent premium to the official rate.

The CBN Deputy Governor in charge of Operations, Folashodun Shonubi, has been acting as governor since Emefiele’s suspension last Friday.

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