Naira rises against dollar, closes N741/$1

By Sodiq Adelakun

The exchange rate between the dollar and naira closed at N741.5/$1 at the official investor and exporter window on Monday, July 3rd, 2023.

The forex market opened at N760.39/$1 and sold for an intra-day high of N792/$1 before closing at N741.5/$1. It also sold for an intraday low of N696.37/$1.

Monday’s closing represents a gain of 3.61%, the strongest since June 16th when it gained 5.58%, and a strong sign that supply may be gradually recovering. Meanwhile, forex turnover was the lowest in 5 days at just $88 million

On the parallel market where the dollar is traded unofficially, the naira closed at N772/$1 representing a N31 disparity from the official rate.

On the P2P market where the dollar is traded with cryptocurrency, it sold for around N775/$1.

Meanwhile, the intra-day low rate of N696.37/$1 is the weakest we have seen since the revised I&E window commenced suggesting that the disparity reported by Nairametrics last week is being addressed.

It was gathered that the foreign exchange traders at the official investor and exporter window had raised concerns about the persistent trade of forex at an intra-day low of approximately N460-N465/$1.

The significant disparity between the intra-day highs, intra-day lows, and the closing rate has left traders suspicious, with some suspecting foul play.

We had also reported that regulators were examining the issues and planned to address them this month if they persisted.

The intra-day low rate of N696.37 suggests this may have been addressed.

Recall that the external reserve has fallen by about $2.8 billion in the first half of 2023 as Nigeria continues to struggle with weak crude oil output and a lack of foreign investor participation in the capital market.

The external reserves opened the year at about $37 billion but have now dropped to about $34.1 billion as of June 2023.

Nigeria’s external reserve is an important barometer for valuing the country’s currency. It is also used to estimate how many months of imports it can finance.

The naira’s exchange rate has a significant impact on Nigeria’s economy, as it affects the prices of goods and services, inflation, exports, imports, foreign reserves, and external debt.