The naira depreciated on Monday by 16 percent to N770.38 per dollar in the Investors and Exporters (I&E) window following a surge in demand for dollars worsened by an acute supply shortage.
According to FMDQ data, the indicative exchange rate for the window increased to N770.38 5 per dollar from N663.04 per dollar last week Friday, indicating a naira depreciation of N107.34.
This occurred amid a decline in the forex turnover by 74.98 percent, or $233.80 million, to $78.03 million from the $70.74 million recorded in the preceding trading session.
Equally, in the P2P window, the Nigerian currency posted a N2 loss against the United States currency on Monday to sell at N772/$1 versus N770/$1 in the preceding trading session.
In the same vein, the domestic currency depreciated against the US dollar in the black market by N13 on Monday to sell at N769/$1 compared with the preceding session’s N756/$1.
But in the interbank segment of the market, the naira closed flat against the pound sterling and the euro at N746.59/£1 and N641.26/€1.
According to reports, the volume of transactions is still very scant, and they are from people who have urgent forex needs and are willing to buy at any exchange rate. Some of them were already used to buying dollars at the parallel market rate and hence are used to buying dollars at above N700 per dollar.
The development in the I&E window follows the new forex measures announced by the CBN on Wednesday.
Director of Financial Markets, Dr. Angela Sere-Ejembi, announced the new measures in a statement titled “Operational Changes to the Foreign Exchange Market,” saying, “The Central Bank of Nigeria (CBN) wishes to inform all authorised dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange (FX) Market:
“Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters (I&E) window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.
“Re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window. Operations in this window shall be guided by the extant circular on the establishment of the window, dated April 21, 2017, and referenced FMD/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window.
“The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.
“Proscription of trading limits on oversold FX positions with permission to hedge short positions with Over-The Counter-futures. Limits on overbought positions shall be zero.
“Re-introduction of order-based two-way quotes, with a bid-ask spread of N1. All transactions shall be cleared by central counterparty (CCP).
“Reintroduction of the Order Book to ensure transparency of orders and seamless execution of the trade.
“The operational hours of trades shall be from 9 a.m. to 4 p.m., Nigeria time.
“Cessation of the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from June 30, 2023.
“Further guidance on these matters shall be communicated in due course. All market participants and the general public are kindly enjoined to abide by these rules.”