At parallel market where foreign exchange is traded unofficially, Naira on Tuesday traded flat at N463 against the Dollar and lost 0.17per cent and 0.37 per cent against the Pound and Euro to close at N596 and N542 respectively.
This was the same rate that it exchanged on Monday and last Friday.
The local currency had strengthened by about 7.8per cent within the one week in September at the parallel market, as the Central Bank of Nigeria (CBN) introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for foreign exchange by traders.
At the Investors & Exporters Foreign Exchange (I& EFX) window, the Naira against the Dollar also closed flat at N386.00.
Foreign exchange turnover at the I&E FX window was $138.60million on Tuesday.
The FMDQ foreign exchange turnover had dropped from $197.42/ million/ last Friday, to/ $37.23/ million/ on Monday.
The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
The drop in dollar supply after the previous trading day’s huge increase, reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
Despite the drop in speculative buying of foreign exchange, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.