I&E Window: $1bn traded on Christmas week

Nigeria recorded a transaction value of $1.1 billion in trades on the Investors and Exporters Window (I&E) where forex is sold officially. This is according to data on the FMDQOTC.

Trading values on the I&E window has increased in recent weeks as the CBN continues to struggle to meet surging demand for forex by corporates rushing to fulfill year end obligations.

When compared to the same period in 2020 about $531 million dollars were recorded as official trades on the I&E window. A total of $3.9 billion has been sold month to date December 2021 compared to $3.3 billion sold in the whole of November 2021.

In what appears to be a deliberate rate selection, the highest trading rate quoted every day since 13th of December is N444/$1 while the low rate has been N405/$1 within the same period.

Closing rate has however hoovered between N414-N415/$1. The highest rate we have seen this month is N463 on December 7th.

Despite the increased forex sales in December, the exchange rate between the naira and dollar depreciated to as high as N575/$1 with some traders.

The exchange rate on some peer to peer exchanges used by cryptocurrency traders to exchange dollars for naira averages around N567/$ on Christmas day and Boxing day.

Nigeria’s external reserves which is a critical source of funding forex sales stood at $40.5 billion as of December 23rd 2021. Forex reserves on the first day of December was around $41.1 billion.

Nigeria’s ability to meet forex demand is often guaged by what happens in the I&E window where forex is traded. The higher the trading values the more investors are confident that pent up demand can be cleared.

Nigeria needs over $100 billion annually to meet demand according to data from CBN forex utilization over the last 5 years. This amounts to over $8 billion monthly at the minimum and only deals with demand met through official sources.

The monthly average sold via the I&E window in 2021 is estimated at $2.65 billion.