On Monday, July 3, 2023, the official investor and exporter window recorded a closing exchange rate of N741.5 to $1.
The foreign exchange market started at N760.39/$1 and reached a high of N792/$1 over the day before finishing at N741.5/$1. Additionally, it was traded for an intraday low for N696.37/$1.
Additionally, this is the first time since the Investor & Exporter Window was reopened on June 14th, 2023, that we have witnessed the exchange rate sell for more than N460 to $1.
Large gains: The closing on Monday showed a gain of 3.61%, the largest since June 16th when it gained 5.58%. This is a very strong indication that supply may be slowly increasing. Moreover, forex turnover fell to its lowest level in five days at just $88 million.
Points to note;
- The naira closed at N772/$1, a difference of N31 from the official rate, on the parallel market.
- It also sold for approximately N775 to $1 on the P2P market, where dollars and cryptocurrencies are traded.
Official Disparity Closing: The intra-day low rate of N696.37/$1 is the lowest we have observed since the start of the revised I&E window, indicating that the discrepancy reported last week is being resolved.
- According to reports, foreign currency traders at the official investor and exporter window expressed concern over the ongoing forex trade at an intra-day low of roughly N460-N465/$1.
- The large discrepancy between the closing rate, intra-day highs, and lows has traders on edge, with some of them suspecting foul play.
- Additionally, there was a claim that regulators were looking at the problems and would deal with them this month if they persisted.
The intra-day low of N696.37 indicates that this might have been taken care of.
External Reserves: In the first half of 2023, the external reserve decreased by around $2.8 billion as Nigeria struggled with low crude oil production and a lack of foreign investor activity in the capital market.
Points to note;
- The external reserves were over $37 billion when the year began but were only about $34.1 billion as of June 2023.
- Nigeria’s external reserve is a crucial indicator of the value of the national currency. It is also used to calculate the number of months it can finance in terms of imports.
- Because it influences inflation, exports, imports, foreign reserves, and external debt, the value of the naira and its exchange rate have a big impact on Nigeria’s economy.
For the growth and development of the economy, a stable and reasonable exchange rate is preferred.