The exchange rate between the Nigerian Naira and the US Dollar reached a new milestone on June 26th, 2023, as it traded as high as N840/$1 at the investor and exporter window. This surge has triggered apprehension among currency watchers, marking the highest rate recorded since the window’s inception in 2018. The previous intra-day high was N815/$1.
However, by the close of business on Wednesday, the exchange rate had depreciated to N768.17/$1, down from N770.17/$1 the previous day. The shift to a market-driven exchange rate policy in Nigeria, adopted two weeks ago, led to a significant depreciation of the Naira from approximately N471.67/$1 to an average of N765/$1.
In terms of turnover, the investor and exporter (I&E) window recorded a volume of $198.13 million on June 26th, 2023, with a total turnover of approximately $1.4 billion since the revised window was introduced. The intra-day highs and lows serve as indicators of the price discovery process, influenced by the interplay of supply and demand.
Over the past week, the exchange rate has fluctuated between N750/$1 and N770/$1, experiencing multiple intra-day highs. Recent trading data reveals that the average exchange rate during this period stood at around N744.8/$1 over the course of eight days.
The spikes in intra-day exchange rate highs have caused concern among traders and currency watchers, as the price discovery process continues. Some analysts argue that the actual value of the exchange rate should be between N650-N680/$1, rather than the parallel market exchange rate of N765-N770/$1.
Additionally, there are concerns that the rapid pace of inflation in the country could have a significant impact on forex liquidity and the maintenance of a stable exchange rate. As the situation unfolds, stakeholders closely monitor these developments, seeking stability and effective measures to address the currency challenges Nigeria is currently facing.