On Tuesday, July 18th, 2023, the naira to dollar exchange rate increased by 6.58% to reach N742.93/$1. The largest day gain Nigeria has experienced since the amended I&E window was introduced on July 14, 2023, according to a report by the Nigerian business news outlet Nairametrics. The daily gain is also the most since at least 2019.
Additionally, FX turnover increased by a staggering 352% to finish at 156.29 trillion, which is the highest level since June 30, 2023. Despite ending the day with a firmer exchange rate, the P2P black market rate dropped to as low as N841/$1, while the exchange rate reached an intraday high of N831/$1.
According to the analysis from the business news agency, the weakening of the naira over the last 10 days may have triggered a supply in the I&E window.
The rise in forex turnover is a sign of more trading activity even if there is no evidence to support this prediction.
Despite the shortage of supplies, demand pressure is still there on the illicit market. The difference between the exchange rate in the I&E window and the black market rate is between N80 and N100 at N742.93/$1, making it one of the largest differences that we have also noted.
The soaring inflation rate is another big issue for the stability of currency rates, according to exchange rate professionals. The country's National Bureau of Statistics recorded an inflation rate of 22.79% for the week, which is lower than the US's greater 3% inflation rate. The greater the gap, the more naira is required to buy one dollar.
According to central bank figures for June 2023, the money supply increased to about N64 trillion during this time.
The currency rate peaked at N831/$1 and started off at N788.17/$1. The naira also hit a low of N707.99 against the dollar, showing significant market instability.
The naira to US dollar exchange rate on NAFEX has ended at an average of N790.8/$1. From the $34.55 million exchanged last Friday to the $156.29 million transacted today, the total amount of currency turnover at the I&E window increased by 352.36%. In the last twelve trading days, $1 billion worth of turnover was transacted, which is less than the $1.67 billion in turnover that was reported during the same time period in June 2023.
Compared to the average rate of N820/$1 on Friday, the Naira-US dollar exchange rate in the unofficial parallel market fell to N825 on Monday.
On Tuesday, July 14, 2023, the cryptocurrency P2P exchange market had deteriorated to its lowest level ever, trading for as little as N841/$1. The devaluation on the P2P market first traded for around N818/$1 but declined to N831/$1 by Tuesday night. N1095/£1 was the exchange rate between the naira and the British pound. The N1090/£1 rate was lower than it was on July 14, 2023, the last trading day before the weekend.
The Central Bank's most recent statistics show that as of July 13, 2023, the country's foreign exchange reserves were $34.047 billion, down marginally from the previous day's $34.061 billion. This amounts to a negligible decline of $14 million in a single day or 0.04%.