Dollar Rate Falls, As Naira Faces Devaluation Pressure

FMDQ Exchange, the platform that tracks the official foreign exchange (Forex) rate between the Naira and the Dollar has disclosed that the forex rate fell to N463.25/$1 on Thursday, 6 April 2023.

The exchange rate had closed at N463.50/$1 after the previous day’s trading session. This means the Naira appreciated against the Dollar by N0.20 kobo or 0.05 per cent on Thursday.

According to the FMDQ Exchange data, the Dollar rate had traded as high as N466/$1 during trading on Thursday, and as low as N460/$1 but eventually settled at N463.25/$1. 

During trading, it was learnt that Investors and Exporters in the official market exchanged $101.45 million worth of foreign exchange. 

Prime Business Africa gathered that the day before, $74.88 million was transacted by traders in the Investors’ and Exporters’ window. This is a 35.48 per cent or $26.57 million difference in the value of forex transacted. 

The Naira gained against the Dollar on the same day KPMG, a professional firm offering Audit, Tax and Advisory services, said the Nigerian currency will suffer more devaluation this year.

KPMG in a report titled; ‘Precipitous Decline in Foreign Capital in a Transition Period,’ said the Naira will come under pressure due to low foreign capital importation in Nigeria.

The National Bureau of Statistics (NBS) had reported this week that foreign capital importation fell to $1.06 billion in the fourth quarter of 2022. 

This is a -8.53 per cent decline when compared to the $1.16 billion foreign capital importation reported in the third quarter of last year. 

KPMG said the decline in foreign investment will weigh on the foreign exchange market which was already struggling with forex shortage and volatility. 

“While substantial reforms may yet be done to reverse the trend of declining foreign capital in the long term, we believe that in the meantime, the country will struggle to attract increasing foreign capital for most of 2023 and struggle to keep the exchange rate from depreciating further, unless it is able to boost its crude oil and non-oil exports, especially now that oil prices are once again rising,” KPMG said.