The naira experienced a 6.77 percent gain against the dollar at the official market, despite decreased liquidity. At the close of trading, the dollar was quoted at N790.68, compared to N848.12 on the previous day. However, at the parallel market, the naira fell to an all-time low of N1,100 per dollar, representing a 3.77 percent loss. This decline was attributed to strong demand from end users who were unable to meet their dollar demands through official channels. The exchange rate gap between the official and parallel market has widened further.
Key Points:
- The official market saw the naira gain 6.77 percent against the dollar, with the dollar quoted at N790.68, a decrease from N848.12 on the previous day.
- The daily foreign exchange market turnover declined by 47.96 percent to $69.88 million from $134.28 million, indicating a reduction in transaction levels.
- At the parallel market, the naira fell to an all-time low of N1,100 per dollar, marking a 3.77 percent loss against the morning trading rate of N1,060/$1.
- The exchange rate spread between the official and parallel markets widened to N309.32 per dollar, representing over 100 percent compared to the exchange gap recorded in June 2023.
- The Central Bank of Nigeria’s move to consolidate foreign exchange markets into the I&E forex window has impacted market dynamics.
Analysis: The naira’s contrasting performance in the official and parallel markets underscores the complexity of Nigeria’s foreign exchange situation. While the official market saw a strengthening of the naira, the parallel market hit an all-time low. This highlights the persistent challenges in managing the currency’s value and ensuring stability in the forex market. Addressing this issue will require a comprehensive approach, including measures to boost foreign exchange reserves, enhance economic diversification, and promote investment confidence in the country.
