The exchange rate between the Nigerian naira and the US dollar dropped to N702/$1 at the close of trading on Thursday, June 15th, 2023. This represents a depreciation of 5.74% within a span of 24 hours, as the naira had been valued at N664.04/$1 the previous day.
This data is based on information sourced from the official Investor and Exporter window, as reported by the FMDQ. The window serves as the platform where traders officially sell the exchange rate.
It is worth noting that this trading session marked the first full day since the central bank implemented new Operational Changes to the Foreign Exchange Market, granting traders the freedom to engage in transactions at market-determined prices.
At the end of the day’s trading, the closing rate settled at N702.19/$1, having opened at N658.5/$1. The intra-day high recorded was N791/$1, indicating that the exchange rate reached that price at some point during the trading session. On the other hand, the intra-day low stood at N461/$1, representing the lowest rate observed during the day’s transactions.
Meanwhile on the P2P lending website, Binance, cryptocurrency traded bought and sold forex for an average price of N763-N764/$1 compared to
Meanwhile, Nigeria’s inflation rate rose yet again for the month of May to 22.41% from 22.22% in April.
Food inflation continues to be the major driver of inflation rising by 24.82% year on year. Core inflation which strips out the more volatile food inflation also rose to 20.06%.
In a report published on the day, the global investment banking group pointed to rising inflation as a reason why interest rates need to be higher in Nigeria.
Despite applauding the new operational changes to forex, it demanded higher interest rates to mitigate the risk of negative real return when the income is adjusted for inflation.
They also mentioned that the government will need to clear the forex pent-up demand of $12 billion which is necessary to unify the currency.
The new currency regime is in its second day of implementation and market analysts expect further volatility as the market continues its search for price discovery.
More worrisome is the month-on-month inflation for the headline inflation rate which rose sharply by 1.94% higher than the previous record of 1.9%.
Rising inflation is seen as a major contributory factor to currency depreciation. This suggests the exchange rate may continue to depreciate until Nigeria achieves a level of moderate inflation rate.