Naira Falls To All-Time Low On Official Market, Sells Above N800/$1 Under Tinubu..
The Nigerian Naira has reached its lowest point ever on the official market, exceeding N800/$1 during Tinubu’s tenure.
According to a report by GoldenNewsNg, on Wednesday, June 22, 2023, the exchange rate between the Nigerian Naira and the United States Dollar reached an intra-day high of N815/$1 at the official Investor & Exporter Window. This marks the highest rate at which the dollar has been traded on the official market since the window’s launch in 2018.
This is the first time the Naira has depreciated to such a degree against the United States dollar on the official market since the Central Bank of Nigeria (CBN) allowed the Naira to float under President Bola Ahmed Tinubu’s new administration.
Last week, the CBN instructed banks to remove the cap on the investors’ and exporters’ (I&E) window of the foreign exchange market, enabling the Naira exchange rate to freely fluctuate.
In a recent interview with Bloomberg in Rabat, Morocco, CBN Deputy Governor Kingsley Obiora clarified that the monetary policy decision implemented is not a free float but rather a managed float.
Obiora cautioned against prematurely determining the lowest point of the Naira’s exchange rate to the dollar, suggesting that it might be too early to make such an assessment.
He mentioned that Nigeria intends to announce further measures to relax foreign exchange controls in the coming weeks, indicating that more policy changes should be expected.
Obiora emphasized that the CBN has refrained from intervening in Nigeria’s foreign exchange markets since the implementation of the new policies, allowing the market to determine the exchange rate.
Contrary to a completely free float, the CBN chief stated that no country, including the United States, operates with a fully unrestricted float.
Meanwhile, GoldenNewsNg reports that the disparity between the black market and the official exchange rate narrowed on Wednesday, with the official rates closing at N763/$1. The black market rate ranged between N760-N770/$1, depending on the buyer or seller.
At the parallel market, also known as the black market, the local currency (abokiFx) opened at N772.00 per $1 in Lagos, Nigeria, on Wednesday, June 21, 2023, following a closure at N757.00 per $1 the previous day.
On Monday, June 19th, the official and parallel market rates achieved convergence when they closed at N770.38. This three-day consecutive parity in the exchange rates is seen as a crucial initial step in the process of price discovery.
Analysts identify three primary phases in price discovery: the transition phase, speculation, and adjustment phase, and the intervention phase.