The naira started the week on a high note as it gained value against the US dollar at the official foreign exchange market on Monday.
According to the data from FMDQ, the naira exchanged at N837.77/$1 on Monday, compared to N927.19/$1 on Friday. This means that the naira appreciated by N89.42 or 10.67 per cent in one day.
The forex turnover at the official market also increased by 32.87 per cent on Monday, reaching $73.94 million. This indicates a higher demand and supply of foreign currency in the market.
However, the naira remained stable at the parallel market, where it traded at N1165/$1 on Monday, the same rate as on Friday. A Bureau De Change operator in Wuse Zone 4, Dayyabu Mistila, said that he was selling the US dollar at N1165/$1 and buying at N1155/$1 on Tuesday morning.
The naira’s performance at the two markets reflects the different exchange rate policies adopted by the Central Bank of Nigeria (CBN). The CBN operates a managed float system at the official market, where it intervenes periodically to stabilize the naira. The CBN also maintains a list of items that are not eligible for forex at the official market, such as rice, cement, and toothpicks.
At the parallel market, the naira is determined by the forces of demand and supply, without any interference from the CBN. The parallel market caters to the needs of individuals and businesses that cannot access forex at the official market, either due to the scarcity or the restrictions.
The CBN governor, Dr Olayemi Cardoso, speaking at the 50th-anniversary of the Chartered Institute of Bankers of Nigeria (CIBN) two weeks ago, admitted that the fluctuating exchange rate was affecting the growth of businesses and the economy. He promised to be transparent and fair to all stakeholders as the CBN performs its functions.
“I’m confident and optimistic that by taking appropriate corrective actions and strategic steps, we can restore macroeconomic stability and address fundamental flaws,” he said.
However, a financial expert, Prof Godwin Oyedokun, attributed Nigeria’s forex crisis to weak economic fundamentals, low foreign reserves, increased external debts and a double forex window. He urged the CBN to adopt a unified and market-driven exchange rate system to boost confidence and attract foreign investment.