Naira Depreciates, As Several Factors Support Rise In Dollar Rate

Naira Gains Against Dollar In Black Market, Official Market

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The exchange rate between the naira and the dollar depreciated in the black market and the official channel on Wednesday, 18 January 2023.

In the official market, the naira held on against the United States currency, appreciating slightly by 0.05 per cent, as the cost of dollar fell by N0.25 kobo.

As a result of the appreciation in naira’s value, the exchange rate between the two currencies closed Wednesday with N461.25/$1.

The drop in the dollar rate of the official market followed the cost of the dollar rising as high as N462/$1, and as low as N440/$1 during the same period in review.

A day before, the naira and the dollar had exchanged for N461.50/$1 in the official channel supported by the financial regulator, Central Bank of Nigeria (CBN). 

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Naira’s appreciation reflects the prediction of the Chief executive Officer of the Financial Derivatives Co Ltd, Bismark Rewane, who said the gap between the official and black market rates will drop in 2023. 

Although Rewane based his projection on an inevitable exchange rate adjustment, which he said will increase the naira of the naira against the pressure from the dollar. 

According to the economist, the foreign exchange rate will fall to about N680/$1 in 2023, from the level of N747/$1 in 2022. 

“In 2023, exchange rate adjustment is inevitable, and when this happens and there are fewer administrative controls in the forex market, there will be more investment flows into the economy, which will help Naira defend against the dollar,” Rewane said. 

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Meanwhile, the value of foreign exchange in the Investors and Exporters window of the official market remains low, after traders transacted $55.54 million worth of forex on Wednesday, contrasting the previous day’s $55.52 million. 

Also, the exchange rate between the naira and the dollar in the Bureau De Change window of the black market also depreciated on Wednesday to N744/$1, from N745/$1 both currencies exchanged for the previous day.

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