Despite CBN's currency float, naira loses N105 in black market, gains N12 on I&E window in July

The naira strengthened by N12.31 to N756.94 per dollar on the I&E window at the end of July 2023 from N769.25 per dollar traded on June 30th, 2023. However, the naira did lose N105 in the black market.

Also, the amount of dollars transacted (turnover) in the Investors and Exporters (I&E) window of the foreign exchange market decreased by 21% in one month from $2.64 billion in June to $1.6 billion in July 2023, against the backdrop of the dollar shortage afflicting the economy.

This is on the back of report by Legit.ng that dollar inflow to Nigeria drop in recent months due to several factors, including the global economic slowdown, the war in Ukraine, and the COVID-19 pandemic.

Legit.ng also reported that the Naira is expected to continue to face pressure and fall to as low as N1,018 per dollar in 2027.

Dollar dips, Naira gains

According to a Vanguard analysis of weekly window transactions as reported by FMDQ, the first week of July's turnover was $417.33 million, and the second week saw a 6.4% decline to $390.59 million.

Turnover rose by 6.05 percent to $414.24 million in the third week but fell by 4.13 percent to $397.11 million in the following week. The total turnover on the last day of July was $67.21 million.

Gatherings revealed that on July 31st 2023, the parallel market exchange rate increased to N870 per dollar from N765 per dollar on June 30, 2023.

The steep 21% fall in turnover in the I&E window demonstrates that the Central Bank of Nigeria's (CBN) June 14th 2023 introduction of FX reforms has not yet resulted in a rise in foreign exchange influx into the nation.

Volatility to end soon

Acting CBN Governor Mr. Ade Shonubi stated that the present currency rate volatility in the I&E window would soon come to an end and that the CBN would continue to intervene in the market to ensure stability. After the Monetary Policy Committee (MPC) meeting in Abuja, spoke to the media.

Shonubi said: "We have started intervening and we have been doing it for a while and we will continue to intervene to bring the market to the level that we believe it should be. Right now and in the short run these volatile times are expected but we expect them to moderate sooner rather than later."