Since the President Tinubu-led administration floated the naira, the nation’s currency has witnessed a free fall at the forex market while hitting record lows in recent weeks. And although, the CBN has said it will initiate some buffers in the coming weeks to remedy this consistent depreciation of the naira, the market has so far been characterised by disparities in the rate offered.
According to the CBN’s official bank rate, the national currency is now trading at a rate of N767 to the dollar. Many commercial banks have likewise set their rates to fall between N767 and N799 in conformity with that rate.
This week has seen some changes for the BDCs, with the most recent showing the naira stabilising at N850/900 in contrast to how it traded a few days before. The Naira continued to trade above N900 against the dollar as of the start of the week. However as of right now, according to BDCs rates as revealed by AbokiFx, the naira trades around N835/N900 vs the dollar, with further swings still anticipated.
The major pushers of the disparity in the forex market are perhaps fintech platforms. A look at rates across the board reveals that various fintechs trade at distinct rates far from the CBN official rate of N767. The closest to the rate was Payday at N800/$.
Other platforms like Bamboo traded the naira at N915/$, Chipper Cash at N865, and Grey Finance traded at N969/$.
Recall that the Naira yesterday recorded significant gain against the dollar in the parallel market and the official Investors and Exporters, I&E window even as the forex market received a major supply boost as the NNPC Limited secured a $3 billion facility from the AfreximBank aimed at stabilising the exchange rate.
The Naira appreciated by N28, or 3.8 per cent in the parallel market, as the exchange rate fell to N885 per dollar from N920 per dollar on Tuesday. The Naira also appreciated by N21.44 per dollar, or 3.25 per cent in the official I&E window as the indicative exchange rate fell to N759.86 per dollar from N781.30 per dollar on Tuesday.
What is to be expected in the forex market in coming weeks
In a shocking turn of events, the Central Bank of Nigeria (CBN) launched a potent policy move to defend the naira. This pragmatic decision not only confirms the Economic Intelligence Unit’s (EIU) July prediction of a return to a managed floating foreign exchange system, but it also ushers in a new era for Nigeria’s financial market.
After weeks of erratic fluctuations in the foreign exchange market, which saw Africa’s biggest economy dealing with a terrifying 16 per cent decline in the value of its currency as a result of the harmonisation policy put in place in June, the CBN finally made the decision to intervene in response to the calls for help. The near-collapse of the naira compelled the apex bank to take this before abandoning an unfavourable course of action.
Adebayo Shonubi, the acting CBN governor, declared the bank’s intention to shield the naira from impending doom and restore a semblance of stability.
In a candid moment, Shonubi revealed, “The president is very concerned about some of the goings-on in the foreign exchange market. One of the things we discussed was what could be done to stabilise and what could be done to improve the liquidity in the market, and also the goings-on in the various other markets including the parallel market.
“He is concerned about the impact on the average person. The things that you do which are purely local are still referenced to the exchange rate in the parallel market. We’ve discussed and I have shared with him what we are doing to improve supply.”
Just yesterday, President Tinubu finally assigned the portfolios of 25 out of the 45 ministerial nominees selected and screened by the Nigerian Senate. According to the list, President Bola Tinubu appointed banker Olawale Edun as minister of finance and coordinating minister of the economy as he seeks to recalibrate Africa’s biggest economy, the president’s spokesman said on Wednesday.
Wale Edun is coming at a time when the country is facing countless challenges threatening the economic stability of the country, and urgent action is needed to restore the biggest economy back to a strong light, at least for the citizens who have become poorer in recent weeks.
Nigeria’s consumer price index (CPI), which measures the rate of change in prices of goods and services otherwise called the inflation rate, rose to 24.08% in July 2023 — up from 22.79 per cent in the previous month. This is according to the National Bureau of Statistics (NBS) report released on Tuesday.
The latest 1.29% spike is the seventh consecutive rise in the country’s inflation rate this year and the highest in eighteen years. Nigeria’s inflation rate last reached the 24% mark in September 2005, when the rate was 24.3%.
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