The naira experienced a significant increase of N36 yesterday, closing at N746/$ in the Investors and Exporters (I&E) window- the official market. This two-day straight gain was due to improved liquidity and transaction activities. On Monday, the naira had closed at N744/$ but then lost N44/$ on Tuesday.
However, on Wednesday and Thursday, it made a sudden rebound. Data from FMDQ Exchange showed that the market liquidity rose from over $63 million on Tuesday to $90 million on Wednesday.
The parallel market, however, was where the naira faced sustained pressure, with the local currency closing at N803/$ on Thursday. This created an N57/$ premium between the official and parallel market rates. The Central Bank of Nigeria (CBN) unified all exchange rates into the I&E window and allowed market forces to determine the exchange rate for the naira.
The I&E window was activated in June 2017 and is the underlying market for the FMDQ Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) benchmark.
This unification of multiple exchange rates into the I&E window has been seen as a game changer in the apex bank’s plan to achieve exchange rate stability. President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, spoke on the need to continuously raise dollar liquidity to sustain naira recovery at both official and parallel markets.
He called on the CBN to ensure liquidity in the retail end of the market by de-monopolizing diaspora remittances and stronger collaboration with BDCs which control the retail end of the forex market. CEO of Moniepoint, Tosin Eniolorunda, said the CBN’s decision to float the naira is a clear step in the right direction for our economy, ensuring investor confidence continues to grow.
