The Nigerian naira experienced a notable appreciation at the Investors and Exporters (I&E) forex window, the country's official foreign exchange market, on Monday. The currency gained 0.25% against the US dollar, thanks to an increased supply of dollars.
According to data from the FMDQ, the dollar was quoted at N768.17 at the I&E window after trading on Monday, compared to N770.17 quoted on Friday. The rise in the value of the naira can be attributed to a boost in dollar supply, which came from various sources such as banks, investors/exporters, and the Central Bank of Nigeria (CBN).
The daily turnover in the foreign exchange market also experienced a significant increase. On Monday, the market turnover rose by 57.91%, reaching $198.13 million compared to the $125.47 million recorded on the previous Friday.
The Central Bank of Nigeria (CBN) recently made changes to the official FX market on June 14, 2023, by integrating certain segments into the I&E Window. This adjustment introduced the "Willing buyer and Willing seller" system. As a result, the official exchange rate rose from N463.38/$ to the current rate of N768.17.
Conversely, the naira witnessed a depreciation of 0.38% (N3/$1) against the dollar at the parallel market, commonly known as the black market, on Monday. This decline in value was driven by increased demand for dollars, particularly from individuals intending to travel for educational, tourism, or business purposes.
Traders in the black market attributed the downward pressure on the naira to the surge in dollar demand. One trader explained, "The demand for dollars is rising, and that is the reason the rate is lower today than Friday."
These developments in the foreign exchange market reflect the ongoing dynamics of currency fluctuations in Nigeria. While the naira experienced appreciation at the I&E forex window due to increased dollar supply, its value decreased at the black market due to heightened demand for dollars.
