The exchange rate at the official Investor and Exporter (I&E) window fell to N770.38/$1, the first working day after the apex bank lifted restrictions on forex withdrawals from domiciliary accounts.
The foreign exchange market in Nigeria has also experienced significant volatility following the Central Bank of Nigeria’s (CBN) operational changes which was released a week earlier.
This is also the first time the disparity between the official exchange rate and the black market rate are close to par since 2018.
- According to data from today’s trade at the I&E window, the opening rate stood at N703.50/$1, while the closing rate reached ₦770.38/$1.
- These figures indicate a notable increase in exchange rates throughout the trading day.
- The spot rate experienced a high of ₦799.00 and a low of ₦461.00, highlighting the market’s volatility.
- Market participants witnessed a substantial turnover of $78.03 million during the day, indicating active participation from investors and exporters.
Exchange rate parity
Nairametrics findings also reveal the black market exchange rate sold for between N765 – N770/$1 for inflow (which represents wired transfer of forex).
- Meanwhile the exchange rate at the crypto exchange Binance where peer2peer trades occur sold for between N760-N763 to the dollar suggesting that the I&E window has now aligned with the peer-to-peer rate.
- The disparity between the exchange rate between the dollar and naira at the official market and the black market rate has now closed for the first time since 2018.
Meanwhile, the market volatility experienced over the last few days can be attributed to the ongoing market discovery process.
- The CBN’s efforts to promote transparency and liquidity may have led to fluctuations in exchange rates as market forces adjust to the new policy framework.
- It is expected that this period of adjustment and volatility will eventually lead to a more stable and efficient foreign exchange market.
Back story
The Central Bank of Nigeria (CBN) issued a press statement on June 18, 2023, providing further guidance to Deposit Money Banks (DMBs) on the operational changes to the foreign exchange market announced on June 14, 2023.
The guidance includes allowing all visible and invisible transactions to be eligible for the Investors’ and Exporters’ window, granting unrestricted access to funds in ordinary domiciliary accounts, and permitting cash deposits not exceeding $10,000 per day or its equivalent via telegraphic transfer.
In addition, the apex bank also introduced the use of its digital currency otherwise known as the eNaira as a payment option to recipients of diaspora remittances. The apex bank said the move was part of its efforts to liberalize the payout of diaspora remittance.
Despite these initiatives, the exchange rate has continued to experience volatility at the Investor & Exporter window
