The exchange rate between the naira and the dollar gained 6.58% to close at N742.93/$1 on Tuesday, July 18th, 2023.
This represents the biggest daily gain we have seen since the revised I&E window was launched on July 14th, 2023. It is also the most daily gain since at least 2019.
FX turnover also rose a whopping 352% to close at 156.29 trillion the largest volume of forex traded since June 30th, 2023.
Despite closing stronger, the exchange rate still recorded an intra-day high of N831/$1 while the P2P black market rate fell to as low as N841/$1.
What this means: Nairametrics analysts indicate the weakening of the naira over the last 10 days may have triggered a supply in the I&E window
- While there is no data to confirm this prognosis, the increase in forex turnover is a pointer to increased trading activities.
- However, demand pressure continues to exert on the black market amidst the dearth of supply.
- At N742.93/$1 the disparity between the exchange rate at the I&E window and the black market rate is between N80 and N100, one of the highest we have also recorded.
Inflationary Pressures: Exchange rate analysts also point to the galloping inflation rate as a major concern for exchange rate stability.
- During the week, the National Bureau of Statistics reported an inflation rate of 22.79% which contrast with the stronger US inflation rate of 3%.
- The wider the disparity the more naira is needed to purchase a dollar.
- Meanwhile, the money supply also rose to over N64 trillion according to central bank data for June 2023.
Breakdown of data
I&E FX window – The exchange rate opened at N788.17/$1 and sold for as high as N831/$1. The naira also reached a low of N707.99 per dollar, indicating high volatility in the foreign exchange market.
- The NAFEX exchange rate between the naira and the US dollar has closed at an average of N790.8/$1.
- The sum of forex turnover at the I&E window rose by 352.36% to $156.29 million, from the turnover of $34.55 million traded last week Friday.
- The total turnover that exchanged hands in the last twelve trading days is $1 billion, compared to the turnover value of $1.67 billion recorded in the same period in June 2023.
Parallel market: The Naira-US dollar exchange rate at the unofficial parallel market on Monday depreciated to N825 per dollar, compared to the average rate of N820/$1 on Friday.
- The crypto P2P exchange market however weakened to the lowest level ever as it traded for as low as N841/$1 by 11 pm on Tuesday, July 14th, 2023.
- The depreciation on the P2P market traded for about N818/$1 a day earlier but deteriorated to N831/$1 by Tuesday evening.
- The naira weakened against the British Pound to N1095/£1. This was a downturn from the N1090/£1 rate recorded on July 14th, 2023, the last trading day before the weekend.
External Reserves: According to the latest data from the Central Bank, the nation’s foreign exchange reserves declined slightly to $34.047 billion as of July 13, 2023, compared to $34.061 billion on the previous day. This represents a minor decrease of 0.04% or $14 million in one day.