The Naira, on Thursday, recorded a massive gain of N36 to close at N746/$ in the Investors and Exporters (I&E) window – official market.
Thursday’s rebound showed two-day straight gain in the official market over improved liquidity and transaction activities.
The national currency closed at N782/$ on Wednesday and N788/$ on Tuesday.
Data from FMDQ Exchange indicated gradual rise in market liquidity from over $63 million turnover on Tuesday to $90 million on Wednesday, contributed largely to Thursday’s rate recovery. Thursday’s turnover data was not ready by the time of filling this report.
The Naira had on Monday closed at N744/$ at the I&E window, made a N44/$ loss on Tuesday and a sudden rebound on Wednesday and Thursday.
However, the parallel market was where the Naira faced sustained pressure, with the national currency closing at N803/$ on Thursday. This created of N57/$ premium between the official and parallel market rates.
The Central Bank of Nigeria (CBN) unified all exchange rates into the I&E window and allowed market forces to determine exchange rate for the Naira.
Data from FMDQ Exchange showed gradual drop in market liquidity from over $260 million turnover to less than $70 million in recent weeks.
The I&E window was activated in June 2017, and represents the broader forex market, where dollars sourced from autonomous sources are traded between Authorised Dealers, Clients and the CBN.
This forex window is also the underlying market for the FMDQ Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) benchmark.
The rate at the I&E window has come to represent the official rate for the Naira after the Central Bank of Nigeria (CBN) abolished multiple exchange rates in the economy.
The unification of multiple exchange rates into the I&E window has been described by stakeholders as a game changer in the apex bank’s plan to achieve exchange rate stability.
The policy, which allowed forex dealers and investors to buy and sell dollars at exchange rate of their choice, provided they can find buyers. This move aims to ensure that the Naira is allowed to trade at the market-clearing rate in the forex market.
– Media Report