Naira gains whopping N12.31 despite dollar shortage, reversing back to N700 per dollar

The Nigerian currency, the naira, gained a whopping N12.3 despite the shortage of Forex at the official Investors and Exporters (I&E) window on Wednesday, August 2, 2023.

The I&E window recorded a 6.01% gain amid a dollar shortage resulting from low Foex inflows from oil earnings, remittances, and foreign capital.

Data from FMDQ revealed that at the end of trading on Wednesday, August 2, 2023, the dollar was quoted at N741 per dollar as against N789.08 per dollar on Tuesday, August 1, 2023, at the I&E window.

BusinessDay reports that the official market lost about 4.25% on Tuesday, August 2, 2o23, closing at N786.08 per dollar from N756.94 traded the day before.

The daily foreign exchange turnover, reflecting the volume of transactions at the official market, increased by 0.17% to $67.33 million on Tuesday, August 1, 2023, from $67.21 million recorded on Monday, July 31, 2023.

Buyers and sellers kept bids as high as N804 per dollar on Tuesday, August 1, 2023, more robust than N830 per dollar on Monday, July 31, 2023, but weaker than Friday, July 28, 2023.

Market auction recorded lower bids of N700 per dollar on Tuesday, August 1, 2023, weaker than N651 per dollar on Monday, July 31, 2023.

Gap between official and parallel market closing

Market analysts believe the official foreign exchange markets might converge as Nigeria seeks to end its chaotic multiple exchange rate system.

Tony Ojiugo, a forex trader, told Legit.ng that the current administration of President Bola Tinubu does not just seek a unified Forex market but a convergence and harmonized market to woo investors and shore up the country’s external reserves.

“If the aim is achieved, the external reserves would be better. The external reserves have suffered massive outflows recently mainly due to capital flight and students seeking foreign education, among other reasons,” Ojiugo said.