On Wednesday the value of the Nigerian Naira crashed against the U.S dollar and the British Pounds at both the parallel market and the Investors’ & Exporters’ FX Window as demand for foreign currency increases.
At the Parallel Market, popularly known as the black market, the value of naira depreciated by N5.00 to exchange at N470.00 per dollar on Wednesday from N465.00 per dollar on Tuesday, according to abokiFX.
This drop in value of naira follows two days of what appeared to be stabilization after two consecutive days of decline that saw its value drop by N4.00 against the dollar. The exchange rate against dollar remained unchanged on Tuesday and Wednesday at the parallel market.
Just as naira crashed against the dollar, it also lost value against British Pound on Wednesday as it was exchanged at N570.00 per GBP compared to the rate of N568.00 per GBP on Tuesday.
At the Investors’ & Exporters’ FX Window, naira dropped against the dollar at the close of trading on Wednesday, despite having a stronger indicative opening rate of N387.75 per dollar against N387.92 on Tuesday according to the data at FMDQ
Naira lost 50kobo as it closed at the rate of N386.50 per dollar on Wednesday compared to N386.00 per dollar it closed on Tuesday.
High and low exchange rates of the naira at the I & E Window on Wednesday were N390.89 and N380.00 per dollar respectively.
The turnover at the I & E Window increased by 44.93% on Wednesday to $18.71 million from $12.91 million recorded on Tuesday.
The value naira appreciated on Monday at the I & E Window following Central bank of Nigeria (CBN) announcement that it has added maize/corn to list of items excluded from official forex market.
The apex bank stated that the new measure is part of efforts by the central bank to increase local production, stimulate a rapid economic recovery, safeguard rural livelihoods and increase jobs, which were lost as a result of the ongoing COVID-19 pandemic.
The CBN official rate for the naira stood at N381.00 per dollar at FMDQ. However, the official rate quoted on the CBN website remains at N360.00 per dollar.
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Past Events
Due to Nigeria’s high dependency on oil revenue, naira has been under immense pressure since the slump in oil prices due to low demand as a result of the Coronavirus pandemic.
The prices of oil has however recovered due to supply cuts agreed by OPEC and improving demand, however it is still below the pre-pandemic levels. Brent crude is trading at $42.16 per barrel at the time of this report.
In it’s effort to avert a free fall in the value of Naira, the Central Bank of Nigeria (CBN) in March “technically devalued Naira” and also maintained it’s forex intervention in the foreign exchange market.
The technical devaluation saw the I & E Window rate move from N360/$1 to N380.2/$1 while the official exchange rate moved from N306/$1 to N360/$1.
The central bank last month said it will work towards the gradual unification of exchange rates across all forex windows.
Written by;
Ifunanya Ikueze
