By Jeph Ajobaju, Chief Copy Editor
Speculators are selling of hoarded dollars, to the gain of the naira, riding on the back of the resumption of foreign exchange (forex) sale at bureau de change (BDC) in anticipation of the resumption of international flights on September 9.
The Central Bank of Nigeria (CBN) stopped forex sale by BDC on March 27 as part of the squeeze on the dollar, but lifted the ban on August 31 to help facilitate the resumption of international flights.
Last week, the naira exchanged at N385.99 to the dollar at the NAFEX intraday trading and at N477 at the parallel market.
But on September 1, the naira appreciated against the dollar to close at N440/$1 at the parallel market, contrasting with N386 at the NAFEX window.
Gains and losses
Data on Abokifx.com shows that this rise on Tuesday is a N25 gain compared to N465/$1 on Monday.
However, research by Nairametrics.com shows that despite offering a bid price some traders fail to turn up to buy dollars, leaving sellers stranded.
- Depreciation to N386/$1 at NAFEX is a 33 kobo drop compared to N385.67 at which it sold on Monday
- Opening indicative rate was N386.03 to the dollar on Tuesday, a 47 kobo gain against N386.50 on Monday.
- N395.13 to the dollar was the highest rate during intraday trading before closing at N386. It also sold for as low as N380/$1 during intraday trading.
Forex turnover
Forex turnover at the Investor and Exporters (I&E) window rose 307 per cent on Tuesday, as it continued with the gain recorded on Monday.
Data Nairametrics tracked from FMDQ shows that
- Forex turnover rose from $14.37 million on Monday to $58.46 million on Tuesday.
- This is a second consecutive trading day of increase in turnover following improved dollar liquidity.
- Despite improved liquidity, the volatility of the forex market persists. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into Nigeria.
- Average daily forex sale last week was about $23.19 million, a huge drop from $71.13 million the previous week.
- Total forex trading at the NAFEX window in August was about $857 million against $937 million in July.
- Exchange rate disparity between the official NAFEX rate and the black market rate has reduced continuously these past few days, dropping to N54.
The CBN moved towards exchange rate unification three weeks ago after it devalued the official rate to N380/$1.
The naira has strengthened especially in the black market as the CBN introduces measures targeted at exporters and importers to boost dollar supply to the forex market and reduce high demand by traders.
The resumption of forex sale by BDC will inject more liquidity to the retail end of the forex market and discourage speculation and hoarding.
