The naira struck a new low over the weekend, trading at N822/$ in the black market and N803.9/$ in the Investors & Exporters (I&E) window, which is the official forex market.
This comes amid a 6.6% drop in the amount of dollars exchanged in the I&E window as dealers expressed disappointment that the supply surge they had anticipated last week did not occur.
A weekly trend in the parallel market indicates a depreciation of 5.5 percent to N822/$ as opposed to the closing rate the previous week of N779/$.
The local currency lost 3.9 percent W-o-W value during the I&E timeframe, falling from N776.9 to N803.9.
The Central Bank of Nigeria, CBN, initiated market reforms on June 14th, 2023, which caused an initial large depreciation. Since then, the exchange rate has been erratic, fluctuating daily until the record low was reached last weekend.
The ‘Willing Buyer Willing Seller’ market model was reinstated in the I&E window after the reform substantially reduced the number of exchange rates.
The cumulative depreciation of the Naira in the I&E window and parallel market since the new measures were implemented is 70% (N321.23) and 7.0% (N58), respectively.
The closing rate for last week also showed that the parallel market margin, which had nearly vanished as a result of the new policy, had begun to expand.
Although the CBN’s measures were intended to increase transparency and boost confidence in order to draw in more foreign exchange supply, forex market participants who spoke with Financial Vanguard said the anticipated increase in supply has not yet occurred. They added that this, along with rising demand and hoarding, are the factors causing the naira to once again depreciate in both segments of the foreign exchange market.