Nigeria’s currency yesterday depreciated by 1.02 percent (N4.83/$1) at the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange (FX) market.
After trading on Thursday the dollar was quoted at N469.50 compared to N464.67 quoted since May 31, 2023, I&E window, data from the FMDQ indicated.
The local currency further weakened against the dollar on Thursday, losing 0.39 percent (N3) at the parallel market, also known as the black market.
During the trading session on Thursday, the dollar was quoted at the rate of N763 as against N760 on Wednesday.
The naira depreciation followed strong demand for dollars by individuals for travel allowances and school fees.
Naira has since last week steadied at N464.67 per dollar at the Investor’s and Exporters forex window despite a decline in the market liquidity on Wednesday.
Most currency traders who participated in the foreign exchange auction on Wednesday maintained bids between N460/$1, lower, and N467/$1, higher bid.
The daily foreign exchange market liquidity declined by 24.57 percent to $140.31 million on Wednesday from $186.02 million recorded on Tuesday, data from the FMDQ indicated.
President Bola Ahmed Tinubu in his inaugural speech on May 29, 2023, signaled plans for a single exchange rate. He said monetary policy needs thorough house cleaning and that the Central Bank must work towards a unified exchange rate.
This will direct funds away from arbitrage into meaningful investment in the plant, equipment, and jobs that power the real economy.
“The naira volatility has underpinned our slow economic growth and fuelled an inefficient informal market,” Aminu Gwadabe, national president, Association of Bureau De Change Operators of Nigeria (ABCON).
Multiple exchange rates he said are ground and encourage illegal economic behaviour for rent-seeking, currency substitution, and hoarding, adding that the lack of unified exchange rates has acute shortages in the retail end sector of the market where the spikes and volatility are most pervasive.
“We as licensed retail exchange Business believe the unification will lead to a true market price discovery and enhance liquidity in our sub-sector.
“To this end we advise the new president to embrace securitization of diaspora remittances by leveraging on the BDCs sub-sector as the most potent and effective transmission mechanisms of monetary policies in the retail end sector of the market,” Gwadabe said.