President Bola Tinubu’s pledge for a unified exchange rate system has yet to materialize as the Naira continues to face suppression in the parallel market. Since the announcement on May 29, the Naira has been fluctuating between N745 and N763 against the Dollar, raising concerns about the effectiveness of the proposed reforms.
It traded flat against the US dollar at the Investors and Exporters (I&E) window to close at N464.67/$1 on Thursday, 1st June 2023, which is the same as the closing rate it recorded in the previous day’s trading session.
Recall that in his inaugural address minutes after becoming the 16th president, Tinubu said “monetary policy needs a sweeping cleanup” and that the central bank needs to work towards a single exchange rate.
On Thursday, the Nigerian Naira witnessed a remarkable surge against the US Dollar, igniting excitement among traders and investors, as it reached an impressive average rate of N745/$1 on June 1st, 2023.
This signifies a significant 2.36 percent appreciation from the last trading session where it stood at N763/$1.
This increase also marks the highest appreciation between the Naira and the dollar since December 1st, 2022, when the naira soared by a remarkable 3.52 percent.
While the Naira maintained its position against the pound on 1st June 2023 as compared to the previous day trading session where the pound traded at an average rate of N950/£1, it showcased its resilience against the British euros.
The Naira appreciated by 0.61 percent, reaching an average rate of N815/€1 on June 1st, 2023, compared to N955/€ in the previous trading session.
These fluctuations in the Nigerian currency illustrate the ever-changing dynamics of the global foreign exchange market, where numerous factors, including economic indicators, geopolitical events, and market sentiment, influence currency valuations.
However, the naira faces strong pressures from the greenback as Fed officials increasingly predict another U.S. interest rate hike in June, and the dollar has strengthened across the board this week as Congress finally set the tone for a two-year debt ceiling hike.
Expectations that the US Federal Reserve (Fed) will raise interest rates again in June have pushed the dollar higher, adding weight to crude oil futures denominated in the US currency.
Meanwhile, the Central Bank of Nigeria (CBN) has refuted a report that the naira has been devalued and the dollar rate increased to N631.
A report emerged on Thursday that the Godwin Emefiele-led CBN devalued the naira by N169.4 or 36.6 percent, from N461.6/$1.
In a statement denying the report, CBN said the naira to dollar rate is currently trading around N465/$1 in the Investors’ & Exporters’ (I&E) window and not N630 as claimed by the report.
“The attention of the Central Bank of Nigeria (CBN) has been drawn to a news report by Daily Trust Newspaper of June 1, 2023, titled “CBN Devalues Naira To 630/$1”.
“We wish to state categorically that this news report, which in the imagination of the newspaper is exclusive, is replete with outright FALSEHOODS and destabilizing innuendos, reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market,” the Acting Director of CBN Corporate Communications, Isa AbdulMumin, said.
