The Foreign exchange scarcity in Nigeria took a turn for the worse on Friday as the exchange rate between the naira and dollar at the parallel market was offered for as high as N485/$1 on Friday at the parallel market.
Some traders sell for N475/$1 while others sell for as high as N490/$1.
The exchange rate at AbokiFX a site that tracks exchange rate prices quotes the parallel market rate at N475/$1 for buyers.
Recall that Nigeria has been grappling with declining foreign exchange earnings due to declining oil prices which has led to dollar scarcity in the country.
Also, forex turnover at the Investor and Exporters (I&E) window recorded a decline on Wednesday, July 29, 2020, as it dropped by 52.1% a day on day. Also, according to data from FMDQ, forex turnover decreased from $39.31 million on Tuesday, July 28, 2020, to a low $18.83 million on Wednesday, July 29, 2020.
FX supply at the official I&E window has fallen in recent weeks dropping to as low as $27 million compared to $47 million the week before. A total of $97 million was sold at the I&E window this week compared to $136.9 million the week before. However, the FMDQ is closed, Thursday and Friday.
The wider the disparity between the official rates and the black market, the more pressure the CBN is to unify the official exchange rate windows and improve suppliers. We believe a significant turning point will arise once the parallel market exchange rate hits the N500 marker.
Recall that Nigeria maintains multiple exchange rates comprising the Central Bank of Nigeria, CBN official rate, the Bureau de Change, BDC rates, Secondary Market Intervention Sales, SMIS, and the Nigerian Autonomous Foreign Exchange Rate, NAFEX also known as the (Importer & Exporter Window).
Recall also that the Central Bank of Nigeria, CBN has continued to intervene in the Forex market to stabilize the Naira, after the Naira weakened against the dollar by 1.14% amidst uncertainty.
According to a recent report from FSDH research, the forex inflows into the I&E window reduced significantly in the second quarter of 2020 on the back of lower foreign portfolio inflows.