At the black market, the naira appreciated marginally by N1 to a dollar to close at N461 to a dollar.
Forex turnover at the Investor and Exporters (I&E) window had a rebound on Thursday, July 2 2020, as it rose by 1876% day on day, a massive increase from what was recorded the previous day at the foreign exchange market. This is aaccording to data from the FMDQOTC, an exchange where forex is traded by foreign investors and exporters.
According to the data tracked by Nairametrics, forex turnover increasedfrom $10.37 million on Wednesday, July 1, 2020 to as high as $204.90 million on thursday, July 2, 2020, representing a massice 1876% on a day-to-day basis. This also represents a major departure from the low forex supply since January 2020, the last time the market hit $200 million turnover mark.
Despite the volatility at the NAFEX market, the spike in volume of sales provided a trading boost reducing the demand pressure experienced in recent days.
In related news, the exchange rate at the I&E aappreciated on Thursday, closing at N386 to dollar, compared to the N386.50 that was recorded on Wednesday, July 1, representing a 50 kobo gain. The opening indicative rate was N386.86 to a dollar on Thursday. This represents a 22 kobo gain when compared to the N387.08 opening rate recorded on Wednesday.
At the of the black market where forex is traded unofficially, the naira appreciated marginally by N1 to a dollar to close at N461 to a dollar on Thursday as against the N462 to a dollar on Wednesday. The exchange rate at the beginning of the week was N460 to a dollar. By crossing N460, the exchange rate has broken a pyschological ceiling going past N460 for the first time since 2017.
Nigeria continues to maintain multiple exchange rates comprising the CBN official rate, the BDC rates and the NAFEX (I&E window). Nairametrics reported last week that the government is mulling unifying the multiple exchange rates in a bid to increase the amount available for state government to share.
The forex scarcity and drop in revenue put pressure on the value of the naira despite CBN’s effort to maintain stability across the forex segments. The CBN is expected to continue with its intervention in the foreign exchange market to ensure market stability.
According to a July 2020 report from Moody’s the foreign currency funding gap for Nigerian banks in expected to rise to $5 billion due to the current low oil prices, volatile forex inflows and lower diaspora remittances amid the coronavirus pandemic. These challenges are threatening to renew the foreign currency liquidity pressures that hit Nigerian banks during the previous oil crisis in 2016-2017.
The report also indicated that dollar shortages are expected to persist over the next 12-18 months if low oil prices continue thereby renewing the forex liquidity crisis that led to severe rationing of dollar and ban on importation of some items during the last oil price crash in 2015-2017.