The naira appreciated to N385.50 at the Investors and Exporters (I&E) window on Monday, June 1, 2020, as the Central Bank of Nigeria’s intervention in the foreign exchange market intensifies.
The demand pressure on the foreign exchange market by currency speculators also seems to be on a decrease.
The local currency strengthened by N0.83 against the dollar, when compared to the N386.33 to a dollar that is exchanged on Friday, May 29, 2020.
The exchange rate at the I&E window is different from the Central Bank of Nigeria’s published exchange rate, which currently stands at N360/$1. This is also different from the exchange rate at the parallel market, which is now N440 to $1, according to information obtained from AbokiFX.
Available information from the daily trading at FMDQ (where FX is traded by importers and investors) shows that the naira improved against the dollar by N0.83, closing at N385.50 to a dollar, as against the indicative rate of N386.25 to a dollar that it opened with on Monday. This also represents a gain of N1 when compared against the N387.25 it opened with last week Friday.
Further analysis of the information from the FMDQ shows that the turnover for the day was $31.40 million. This shows a drop of $125.38 million when compared with the $156.78 million turnover that was recorded on Friday.
The CBN Governor, Godwin Emefiele had noted that the modest recovery of crude oil prices, which is over $35 per barrel, would reduce the pressure on government revenue and the external reserves which rose by $2.35 billion in 21 days to close at $35.77 billion as of May 21, 2020.
The increase in the external reserves boosts had boosted CBN’s ability to intervene in the market. The increase in the liquidity of the foreign exchange market and the drop in demand of dollars by currency speculators also caused a rebound of the naira at the parallel market, as the local currency gained N10 against the dollar on Monday when it appreciated to N440 to a dollar as against the N450 to a dollar it traded on last week Friday.