Naira Loses To Dollar, Others, Amid Biggest Devaluation Concerns

Forex Transaction Drops In Official Market, Dollar Rate Rises In Black Market

3 mins read

The volume of foreign exchange (forex) traded on Tuesday, 17 January 2023, fell by 72 per cent in the Investors and Exporters (I&E) window of the official market.

According to data obtained from the FMDQ Exchange, which monitors foreign exchange rates in the official market, the 72 per cent decline represents a $143.088 million drop.

Prime Business Africa gathered that traders had transacted $55.52 million worth of forex. This is below the $198.60 million recorded as transaction value during the previous trading session. 

The drop in the value of transactions between Monday and Tuesday was on the back of the exchange rate trading flat in the official market. 

After closing business hours during the period in review, the foreign exchange rate between the naira and the dollar closed at N461.50/$1, the same level it settled at on Monday. 

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However, in the black market, the United States dollar had appreciated against a weak naira. In the Bureau De Change window of the parallel market, the cost to buy the American greenback rose by N2. 

The rise in dollar value represents 0.2 per cent drop in the value of naira within the black, as the exchange rate of both currencies closed at N745/$1. This is in contrast to the N743/$1 the rate closed with the day before. 

Note that the naira has struggled to maintain its value against the naira since 2022 despite the Central Bank of Nigeria (CBN) disbursing $15.3 billion to support the local currency in the foreign exchange market. 

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In a report released by the CBN covering the first, second and third quarters, including October, the central bank sold $15.3 billion to forex dealers to increase forex in the official market where scarcity has persisted. 

The CBN report reads: “Total foreign exchange sales to authorised dealers by the bank, at $4.86bn, decreased by 5.8 per cent, compared with the previous quarter’s level.” 

“Total foreign exchange sales to authorised dealers by the bank at $4.81bn, decreased by 0.9 per cent, compared with the level in the preceding quarter,” The apex bank added. 

The financial regulator stated further: “Total foreign exchange sales to authorised dealers by the Bank decreased in the review period. Foreign exchange sales at $4.18bn, decreased by 13.1 per cent, below the level in the preceding quarter.” 

READ ALSO  Naira Falls In Official Window, Dollar Rate Declines In Black Market

Meanwhile, in October 2022, over $1.46 billion was sold to the authorised dealers.

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