Nigeria’s local currency, the naira, continued to decline after the apex bank’s floating exchange rate (foreign exchange) worsened the local currency’s position in the market.
On the Investor and Exporter FX window, US Dollars were sold to Importers, Companies and Manufacturers at N702.19, FMDQ Exchange data shows, N664.04 days Yesterday.
The local currency has lost about 41% by midweek after a dramatic shift to a less restrictive exchange rate policy took effect as the CBN under the recent administration gave banks autonomy in determining exchange rate.
The decision to float the naira comes into effect with the collapse of existing market segments in the investor and exporter window, Cowry Asset Management said in a note on Thursday.
On the other hand, the parallel market saw a slight appreciation for the N757 as the race towards the convergence of multiple exchange 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 the report. Cowry Asset Limited.
Market data shows that the FMDQ OTC OTC market sets the Nigeria Autonomous Foreign Exchange Fixed Rate (NAFEX) at 610.20 Naira per US Dollar. This means that there is still a gap between the two windows, although analysts expect all ratios to be in agreement as the market continues to find balance.
NAFEX – Reference FMDQ – rate for spot forex transactions in the forex window of traders and exporters. NAFEX is considered the spot rate queried based on submissions from ten contributing banks
According to FMDQ Exchange documentation, upon receipt of a quote, submissions by individual contributing banks are ranked in descending order.
