Naira Falls Massively Against Dollar At Black Market Ahead of MPC Meeting

Naira has fallen massively against Dollar on the black market ahead of MPC Meeting.

Newsone reports that the exchange rate between the naira and the US dollar closed at N795.28/$1 at the official Investor and Exporters window on Monday, 17th July 2023. 

This compares to N820/$1 traded by BDC operated on the same day at the unofficial I&E Window.  The official exchange rate also improved from the N803.9 per dollar that it traded at on Friday. 

The local currency opened at ₦825.00 per $1 at the parallel market otherwise known as the black market, today, Tuesday, 18 July 2023, in Lagos Nigeria, after it closed at ₦820.00 per $1 on Monday, 17 July 2023.

Even though the dollar to naira opened in the parallel market at ₦825 per $1 today, Newsone reports that the Central Bank of Nigeria (CBN) does not recognize the parallel market, otherwise known as the black market. The apex bank has therefore directed anyone who requires forex to approach their bank, insisting that the I&E window is the only known exchange.

Meanwhile,  Newsone Nigeria reports that the N825/$1 traded at the parallel market today is weaker than the average rate of N815/$1 recorded last Friday, according to Newsonlinw Nigeria survey.

Naira Falls Ahead of MPC Meets today

The monetary policy committee of the central bank is expected to meet on Tuesday, July 18, and Wednesday, July 19, 2023,  to deliberate on the economy.

• This will be their first time meeting since the revision to the forex market was introduced. It is also the first meeting without CBN Governor Godwin Emefiele.
• The committee will be expected to address the effect of monetary policy tools on rising inflation which is the core mandate of the apex bank.
• Analysts also expects the MPC to comment on the demand pressure hitting the exchange rate and how to address it.
• More importantly, the monetary policy rate is expected to be the key highlight of today’s meeting. Nairametrics expects the rate to be increased to at least 19% or at the least 18.75%.

Breakdown of data 

I&E FX window –  The exchange rate opened at N782.79/$1 and sold for as high as N832/$1.

• The naira also reached a low of N699.50 per dollar, indicating high volatility in the foreign exchange market.
• The exchange rate between the naira and the US dollar has closed at an average of N768.38 to a dollar for the first eleven trading days of the month, in contrast to the average rate of N524.21/$1 in the same period of the previous month
• The turnover recorded at the I&E window decreased by 26.33% to $34.55 million, from the turnover of $46.90 million traded last week Friday.
• The total turnover that exchanged hands in the last eleven trading days is $849.04 million, compared to the turnover value of $1.59 billion recorded in the same period in June 2023. 

Parallel market – The Naira-US dollar exchange rate at the unofficial parallel market on Monday depreciated to N820/$1, compared to the average rate of N815/$1 on Friday.

• This represents a record high in the black-market exchange rate against the naira, as demand for dollars continues to pile pressure on the black market.
• The crypto P2P exchange market recorded a slight decline in the value of the naira against the US dollar. The average exchange rate at the market was N818.65/$1, compared to N817/$1 in the previous trading session. 
• The naira weakened against the British Pound by 3.81% on July 17, 2023, closing at N1090/£1. This was a downturn from the N1050/£1 rate recorded on July 14th, 2023, the last trading day before the weekend.  

External Reserves: According to the latest data from the Central Bank, the nation’s foreign exchange reserves declined slightly to $34.038 billion as of July 13, 2023, compared to $34.047 billion on the previous day.