The Parallel and Official Markets concluded the week with the Naira maintaining its position against the US Dollar.
In both the official Investor and Exporter window and the parallel market, the Naira closed at N902.45/$ and N1350/$, respectively. This stability comes amid various factors influencing the foreign exchange market in Nigeria.
In this post, I’m going to discuss the unyielding stability of the Naira against the Dollar, examining market complexities, crypto influences, and ongoing challenges in Nigeria’s foreign exchange industry.
The Parallel And Official Markets Conclude Friday With The Naira Flat Versus The Dollar
On Friday, the official exchange rate of the Naira against the dollar remained flat at N902.45/$, just slightly above the N902.08/$ recorded on Thursday.
The day’s trading opened at N909.90/$, reaching a high of N1,280/$ and a low of N467/$ before ultimately closing at N902.45/$. The official market saw a 17.36% decrease in total forex turnover, amounting to $145.89 million.
In the parallel market, the Naira maintained a consistent rate of around N1,300/$ throughout the week, causing concerns among Bureau de Change Operators.
This rate has been in effect since Tuesday, and operators fear further appreciation may negatively impact their business.
Bureau De Change operators, such as Magaji Mohammed and Abubakar Taura, revealed varying rates for buying and selling dollars.
This discrepancy is attributed to factors such as denomination, with the price of a $20 bill differing from that of a $100 bill.
Factors Influencing the Naira’s Exchange Rate
Despite efforts by the Central Bank of Nigeria (CBN) to address backlogs of forward contract obligations and a liquidity boost from a $2.25 billion foreign exchange support facility by the African Import-Export Bank, the Naira’s exchange rate remains high.
Even though the CBN has committed to settling all remaining valid forward transactions to alleviate pressure on the country’s exchange rate, the National President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, expressed concern that the $2.2 billion released by the African Import-Export Bank might not be sufficient to stimulate the market.
Crypto Market Dynamics
In the emerging crypto market, the Naira’s value remained above N1,330/$ on Binance’s peer-to-peer exchange.
Nigeria has gained recognition as a significant crypto market, boasting one of the largest peer-to-peer exchange volumes globally, according to Chainalysis, a blockchain firm.
The persistently high exchange rate of the Naira against the dollar in the crypto market raises questions about the impact of digital currencies on traditional foreign exchange dynamics.
This dynamic world adds complexity to the overall economic situation and calls for a refined way to understand and address the challenges faced by the Naira in both traditional and digital financial spaces.
In Summary
The Parallel and Official Markets concluded Friday with the Naira maintaining its position against the US Dollar.
While the official exchange rate remained stable, the parallel market witnessed a consistent rate of around N1,300/$ throughout the week.
Various factors, including concerns among Bureau de Change Operators and the impact of digital currencies, contribute to the complex dynamics of the Naira’s exchange rate.
Efforts by the Central Bank of Nigeria to address backlogs and provide liquidity have yet to significantly impact the market, as reflected in the sentiments of industry experts.
As Nigeria continues to deal with these challenges, a comprehensive and adaptive approach is essential to promote stability and confidence in the Naira’s exchange rate against major world currencies.
