Naira appreciates at NAFEX window to close at N394.30/$

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Factual Pursuit of Truth for Progress

 

By Francis Ogwo

The exchange rate between the naira and dollar closed at N394.3/$1 on Tuesday at NAFEX which was the first trading day of the year.

This figure according to observers is a good omen for the country’s endangered currency as compared to the N410.25 recorded on the last day of trading December 31, 2020.

Reports say the Central Bank’s injection of forex dropped the prices lower on Monday reversing the depreciation recorded on the last day of trading. We had also reported last week that the latest round of adjustment at the I&E window is temporary as the rates could fall back below N400/$1.

However, at the black market where forex traded unofficially, the exchange rate remained stable at N470/$1 on Monday, January 4, 2021. The exchange rate at the parallel market closed at N470/$1 on the last day of trading December 31, 2020. It has been trading at N470/$1 since the 29th of December 2020.

The exchange rate disparity between the parallel market and the official market widened again to N75.7 representing a 16% devaluation differential.

At NAFEX, the Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N394.30/$1 as against N410.25 reported on December 31, 2020.

This means a N15.95 difference to start the year on a positive note.

The opening indicative rate was N409.93 to a dollar on Thursday. This represents a N17.05 drop when compared to the N392.88 that was recorded on Thursday last week.

The N411.05 to a dollar was the highest rate during intra-day trading before, it still closed at N394.30 to a dollar. It also sold for as low as N387/$1 during intra-day trading.

Forex turnover at the Investor and Exporters (I&E) window declined by 90.3% on Monday, January 4, 2021.

According to a recent data, forex turnover dropped from $235.75 million on Thursday, December 31, 2020, to $22.75 million on Monday, January 4, 2021.

The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.

The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.

Many are also optimistic of a gradual move of the naira into the green zone with the opening of the borders.

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