THE Nigerian local currency, the naira, falls further after the apex bank’s foreign exchange (forex) rate floating which worsened the market position of the local currency.
At the investors and exporters FX window, the US dollar was sold to importers, corporates, and manufacturers at N702.19, data from FMDQ Exchange shows, N664.04 yesterday.
The local currency lost about 41% midweek following a significant shift to a less restrictive fx policy that came into force as the CBN, under the recent administration, granted banks the autonomy to determine their foreign exchange trading rates.
The decision to float the naira became effective with the collapsing of the existing market segments into the Investors and Exporters window, Cowry Asset Management said in a Thursday note.
On the other hand, the parallel market experienced a slight appreciation to N757, as the race toward convergence of multiple fx rates began. One-month, three-month, and one-year forward rates closed higher at N676.1, N712.22, and 767.72, respectively, indicating losses of N191.35, N201.05, and N202.1, according to Cowry Asset Limited.
Market data show that the FMDQ over-the-counter OTC market puts Nigeria’s Autonomous Foreign Exchange Fixing (NAFEX) rate at N610.20 per US dollar. This signifies there is still a gap between the two windows, though analysts expect all rates to be unified as the market continues to find equilibrium.
NAFEX – FMDQ benchmark – rate for foreign exchange spot operations in the Investors’ & Exporters’ FX window. NAFEX is considered a polled spot rate based on the submissions of ten contributing banks
Upon receipt of quotes, the individual contributing banks’ submission is ranked in descending order, according to the FMDQ Exchange document.
