The nation’s currency, Naira continued its free fall on Wednesday as exchange rate at the parallel market fell to another new 3-year low closing at N470/$1.
Also on the officially recognized NAFEX market, the exchange rate depreciated closing at N386. 50/$. But forex turnover rose by 44.9%. At the black market where forex is traded unofficially, the Naira depreciated by N5 to a dollar to close at N470 to a dollar on Wednesday, according to information from Aboki FX a prominent FX tracking website. This is against the N465 that it exchanged on Tuesday. However, during intra day trading, Nairametrics research observed the dollar sold for as high as N470/$ and as low as N465/$1. Nairametrics FX tracker also reported a parallel market FX rate of N470/$1.
Naira also depreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N386.50/$1, compared with the N386 that was reported on Tuesday, July 14. The opening indicative rate was N387.75 to a dollar on Wednesday. This represents a 17 kobo gain when compared to the N387.92 to a dollar that was recorded on Tuesday.
Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window), among others.
But, recently, the government has set plans in motion to unify the multiple exchange rate in line with requirements from the World Bank. Nigeria is seeking a world bank loan of up to $3 billion. The country has been under pressure from the International Monetary Fund and the World Bank for currency reforms.
The reforms, according to some analysts is wrongly timed as market fundamentals do not support the exercise inview of challenges plaquing the economy.