Naira weakened against the U.S. dollar at the Investors & Exporters (I&E) window of the foreign exchange market on Wednesday, according to data on the FMDQ Security Exchange webpage where currencies are officially traded.
Naira closed at N394.25 at the Wednesday trading session, representing N0.25 or 0.06 per cent decrease from N394.00, the rate at which it closed at the previous session.
The depreciation set in as turnover contracted by 52.46 per cent, with $51.51 million recorded as against the $108.34 million posted on Tuesday.
The local unit witnessed an intraday high of N385.00 and a low of N396.00 before closing at N394.25.
Meanwhile, the domestic currency (naira) closed at N478 to a dollar at the parallel market, data from abokiFX.com, the webpage that collates parallel market rates in Lagos showed. This translates N2 or 0.42 per cent strength than N480 which it exchanged hands with the U.S dollar in the previous session.
That leaves a spread of N83.75 between the unofficial market and the I&E window exchange rates, which translates to a gap of 21.24 per cent.
The continuous increase in the spread between the rates at which naira is traded at both markets has been attributed to the significant decline in dollar inflow from crude sales, Nigeria’s main source of revenue, due to a crash in oil prices in April last year, and the coronavirus pandemic.
In order to bridge this gap, the Central Bank of Nigeria has initiated policies to regulate the market.
In December last year, the CBN had directed International Money Transfer Operators (IMTOs) and commercial banks in the country to pay beneficiaries of diaspora remittances only in dollar in order to deepen liquidity in the foreign exchange market and create transparency in the administration of diaspora remittances into Nigeria.
Also, in a memo last week Friday, the apex bank vowed to sanction IMTOs that are still flouting the directive.
Interestingly, the CBN on Tuesday, at the Monetary Policy Committee meeting said as at January 21, Nigeria’s foreign exchange reserves rose from $34.94 billion in November 2020 to $36.23 billion.
The CBN Governor, Godwin Emefiele, attributed this increase to improvement in crude oil prices.
“This reflected improvements in crude oil prices, partial global economic recovery amid optimism over the discovery and distributions of COVID-19 vaccines by most developed economies,’’ he said.
The apex bank in a memo on Friday last week vowed to sanction IMTOs that are still, despite its directive, paying remittances in the local currency.
The CBN’s official rate on Wednesday was still N379 per dollar.
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