Naira Weakens, Dollar Rate Rises In Official Market

Traders and investors exchanged the Naira and Dollar at N461.50/$1 on Friday, 10 March 2023, the FMDQ Exchange data has disclosed.

The foreign exchange (Forex) rate rose from N461.00/$1 reported on Thursday, 9 March 2023, indicating the Naira depreciated by -0.11 per cent when compared to the N461.50/$1 the forex rate closed Friday at in the official market.

During the trading period on Friday, about $82.56 million was exchanged on the investors and exporters window, which is backed by the Central Bank of Nigeria (CBN).

The value of foreign exchange traded between investors and traders depreciated by $270,000 when compared to the $82.83 million recorded a day before. 

In the interbank segment, Pound Sterling and the Euro traded at N548.01/£1 and N487.11/€1, respectively, maintaining the same rate as the previous day.

The exchange rate in the official market has been projected to rise towards the end of the year following the emergence of Bola Tinubu as President-elect.

Tinubu has promised to review the multiple foreign exchange markets, and this is expected to lead to the balancing of the rates and depreciation of the Naira against the Dollar. 

According to a market analyst, who spoke on condition of anonymity: “by the time you now do a rebalancing of the naira, it means exchange rate would now move from around N460 in the official market even as high as N470 or N500 right.” 

This is not far from the projection made by Economist at Bank of America Sub-Saharan Africa, Tatonga Rusike, who stated the Naira could weaken to N520/$1 in 2023. 

Rusike said the Naira is overvalued by 20 per cent according to Bank of America’s currency fair value analysis, “We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as 520 per USD,” he said. 

The economist also disclosed that: “While the naira will come under increasing pressure due to limited government external borrowing, devaluation is unlikely to happen until after the February 2023 presidential elections.”