The gap between official and unofficial exchange rates have risen by 32.28 percent (N133) as pressure on demand for dollars heightened amid a shortage.
Official and unofficial exchange rates as of Friday stood at N412 and N545 per dollar, respectively.
Naira ended the five trading days depreciating to N545 per dollar, the lowest ever at the unofficial market. Between Monday and Friday, it weakened by 2.4 percent (N13) from N532 to N545/$.
The local currency opened the week at N532 per dollar on Monday and steadied at the same rate on Tuesday. However, it weakened by N3 to N535 on Wednesday and further to N540 and N545 per dollar on Thursday and Friday.
The local currency fell sharply to N525 to the dollar on July 28 after the Central Bank of Nigeria (CBN) announced that it would discontinue the sale of dollars to the Bureau De Change (BDC) operators due to foreign exchange infractions.
At the Investors and Exporters (I&E) forex window, also known as the Nigerian Autonomous Foreign Exchange (NAFEX), which is the official market, Naira fell by 0.21 percent (N0.87) to N412 per dollar on Friday from N411.13/$, data tracked by BusinessDay from the FMDQ indicated.
The market witnessed a shortage of dollars as turnover declined by 9.38 percent to $88.39 million on Friday from $97.54 million recorded on the opening trading day on Monday.
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At the Interbank foreign exchange market, the Naira/dollar exchange closed flat at N380.69/USD amid weekly injections of USD210 million by CBN into the forex market.
The breakdown of the allocation showed that USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles, a report by Cowry Asset Management Limited said.
Elsewhere, the Naira/USD exchange rate fell (Naira appreciated) for all of the foreign exchange forward contracts: 1 month, 2 months, 3 months, 6 months and 12 months contracts increased by 0.12 percent, 0.12 percent, 0.09 percent, 0.21 percent and 0.47 percent to close at N412.75/USD, N415.05/USD, N417.31/USD, N423.01/USD and N434.22/USD respectively. However, the spot rate was flat at N380.69/USD.
“In the new week, we expect the I&E FX rate to further depreciate as unmet genuine demand flows to the unofficial market. Hence, we feel speculators will continue to take advantage of the wide gap between the official and unofficial windows even as investors scramble for USD denominated investment,” analysis of Cowry Asset said.
The CBN on Friday reminded banks of their responsibility to not only know their customers (KYC requirements) but also know their customers’ business (KYCB requirements).
In a letter to all banks dated September 10, 2021, and signed by O.S Nnaji, director, trade and exchange department, the CBN reiterated that the FX operating licenses of any bank or banks that are found culpable with ongoing investigations would be suspended for at least one year.
“Given these responsibilities and in view of recent occurrences in the market, the CBN would like to remind banks to desist from all and any forms of FX malpractices,” the letter titled ‘Observance of Due Diligence in the Processing of Foreign Exchange Transactions ‘, reads.
