Dollar Rate Rises As CBN Finds It Difficult To Supply Forex

The naira couldn’t hold its ground against the dollar on Friday, 13 January 2023, depreciating in value by 0.16 per cent, data from the FMDQ Exchange has shown.

According to the data rate aggregator of the official market, it was learnt that the Nigerian currency exchanged for the United States (US) legal tender at N461.90/$1 at closing hour. 

During trading on Friday, the exchange rate between the naira and the US dollar had risen to as high as N462/$1. Both currencies were also exchanged for as low as N440/$1.

Note that during the previous trading session on Thursday, 12 January 2023, the exchange rate between the naira and the dollar closed at N461.17/$1. 

The decline in the value of the naira is on the back of dollar scarcity in the official market backed by the Central Bank of Nigeria (CBN). 

Dollar scarcity in the country had raised concern in the banking industry that the central bank might stop selling forex to the financial institutions operating in the country. 

Although the financial regulator had dispelled the claim last month, it stated that the banks should expect less forex supply, as the apex bank ration available United States dollars. 

The scarcity is reflected in the supply of forex transacted in the Investors’ and Exporters’ window of the official market, as the worth of forex traded on Friday fell to $72.18 million. 

This is a $16.77 million or 18.9 per cent decline when compared to the $88.95 million recorded on Thursday, and below the $151.26 million worth of forex transacted on Wednesday.

CBN governor, Godwin Emefiele, had stated that it is hard to continue to support the official market with forex, asking banks to also ramp up their own forex from non-oil exports. 

“…CBN will continue to support the market with foreign exchange, albeit as hard as it may be. 

“We will continue to support the market while the banks themselves continue to ramp up their own sources of non-oil export that can earn FX through repatriation which they can use to fund the needs of their customers,” Emefiele said.