Naira trades 864/$ at official market as dollar supply rises

On the official Investors and Exporter window on Monday, the naira closed at N864.29/$, up 27.16 percent.

This is due to the fact that last Friday's closing trading saw a massive 86.83 percent increase in daily dollar turnover, from $70.90 million to $132.46 million. According to data from the FMDQ Securities Exchange, the naira's increase represents a gain of N234.76 from the all-time low of N1099.05/$ it closed trading at last Friday.

Trading began on Monday at N867/$ and went through a high of N1185.10/$ and a low of N720/$. When the dollar's daily turnover reached $132.46 million, it finally settled at N864.29/$.
The national currency's movement has been erratic since the Central Bank of Nigeria removed the rate cap, but Monday's rate represents a slight recovery.
The nation's foreign exchange reserves have decreased by roughly $1.6 billion to $32.97 billion since the apex bank decided to unify rates. The free fall of the naira has been attributed to this decrease in foreign exchange reserves.
Nigeria reportedly lacked sufficient foreign exchange reserves to support its exchange rate unification policy, according to the Economist Intelligence Unit.

"In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors uneasy," the report reads in its Africa Outlook edition. The exchange rate regime will become unstable and lead to periodic devaluations if high inflation and the parallel market continue to spread.
Olayemi Cardoso, the governor of the CBN, recently spoke about Nigeria's efforts to stabilise its exchange rates. In an attempt to rescue the market, he said the bank planned to release new FX guidelines.

"Clear, transparent, and harmonised rules governing market operations are essential to ensure the proper functioning of domestic and foreign currency markets," he stated. Before enforcing any new regulations, banks and FX market operators will be consulted extensively in the development of new foreign exchange guidelines and legislation.