The Naira yesterday depreciated by 16 per cent to N770.38 per dollar in the Investors and Exporters (I&E) window following a surge in demand for dollars worsened by acute supply shortage.

Data from the FMDQ showed that the indicative exchange rate for the window rose to N770.38 5 per dollar from N663.04 per dollar last week Friday, indicating N107.34 depreciation for the naira.

But in the parallel market, yesterday, the naira appreciated from N4 to N755 per dollar from N759 per dollar last week.

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Consequently, the I&E exchange rate surpassed the parallel market exchange rate for the first time since 2019, the I&E exchange rate was.

Forex market sources told Vanguard that the depreciation was majorly due to a surge in demand buoyed by over $3.7 billion matured Letters of Credit, LCs. The situation they stressed is worsened by supply shortage as the I&E window is yet to see significant forex inflow since the Central Bank of Nigeria, CBN, reintroduced the willing seller, willing buyer model.

According to a source, the volume of transactions is still very scant and they are from people who have urgent forex needs and are willing to buy at any exchange rate. Some of them were already used to buying dollars at the parallel market rate, and hence are used to buying dollars at above N700 per dollar.

The development in the I&E window follows the new forex measures announced by the CBN on Wednesday.

Announcing the new measures in a statement titled, “Operational Changes to the Foreign Exchange Market”, Director, Financial Markets, Dr. Angela Sere-Ejembi, said, “The Central Bank of Nigeria (CBN) wishes to inform all authorized dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange (FX) Market:

“Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters (I&E) window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.

“Re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window. Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FMD/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window.

“The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.

“Proscription of trading limits on oversold FX positions with permission to hedge short positions with Over-The Counter-futures. Limits on overbought positions shall be zero.

“Re-introduction of order-based two-way quotes, with bid-ask spread of N1. All transactions shall be cleared by a Central Counter Party (CCP).

“Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades.

“The operational hours of trades shall be from 9am to 4pm, Nigeria time.

“Cessation of RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from 30 June 2023.

“Further guidance on these matters shall be communicated in due course. All market participants and the general public are kindly enjoined to abide by these rules.”

https://www.vanguardngr.com/2023/06/naira-exchanges-n770-38-to-dollar-drops-16-19/

Buhari too dey fear. He made us believe that floating Naira will bring Nigeria on its knees. Of course, there will be consequences for flotation, which we hope will be managed by Tinubu and his team.

Meanwhile, the same Buhari connived with his 'friend and brother' Emefiele to make many disastrous economic decisions.

Watch out for the closing price

Money must be made, depreciation or appreciation

If you are a Nigerian sending money into the country now, you are made!

Wonderful. I hope it comes down as economists have predicted.

Don't you ever think the effects of Buhari's eight years of mismanagement will easily disappear like magic, Nigeria will keep suffering from his failure 50 years from now. Buhari didn't only kill the present, he also killed the future , it will take God's intervention to take Nigeria out of the mess he put Nigeria into. Nobody should blame PBAT or subsequent Nigerian presidents

thesicilian:
Money must be made, depreciation or appreciation

can you eat money, wash with it, drive it, or wipe your bum bum with it? Never.

It is things that necessitated the creation of money.

CodeTemplar:
can you eat money, wash with it, drive it, or wipe your bum bum with it? Never.

It is things that necessitated the creation of money.

Your point being?

CodeTemplar:
Wonderful. I hope it comes down as economists have predicted.

In the long run, the naira will continue to fall until we get inflation well under control.

The Tinubu propagandists should have held off on talking about naira strength as this is not well founded.

thesicilian:
Money must be made, depreciation or appreciation

With Tinubu in power

It will be 1000 by December.

Nigerians are so gullible

Appointing his cronies into office is seen as achievement... student loan?..

removing subsidy?..
increasing vAT on diesel?
power by July 1?..
with 30k minimum wage
these are all anti people policy..

ZombiePUNISHER:


With Tinubu in power

It will be 1000 by December.

Nigerians are so gullible

Appointing his cronies into office is seen as achievement... student loan?..

removing subsidy?..
increasing vAT on diesel?
power by July 1?..
with 30k minimum wage
these are all anti people policy..

Yen yen yen...
We know your type, patiently waiting for an opportunity to gloat over nothing. You know what is truly anti-people? Employing a man who failed as a governor to become president!

Nigeria are in for a good time.

How can you float the dollar to Nigeria without increase earnings on forex?

You also went ahead and cancel withdrawal limit in domiciliary accounts when bureau de exchange rate still exist and have not been unify with bank rates.

When demand for dollar is more than the supply, rates are bound to increase.
The only solution for now is to increase foreign exchange earnings, or else, Naira to dollar might get to N1000

thesicilian:

Yen yen yen...
We know your type, patiently waiting for an opportunity to gloat over nothing. You know what is truly anti-people? Employing a man who failed as a governor to become president!

Do you know that Buhari annual haircut costs the country 50m ...
Tinubu can never cut the cost of governance
it's only on the poor masses that he gloats..

There's no former Governor dead or alive who left more money in state coffers while handing over like Obi..

There's a reason APc successfully made Nigeria the poverty capital of the world..

They had people like you who embrace and support their oppressors on the alter of tribalism and religious bigotry

The most important thing here is that government is not spending billions to protect Naira. That billions will will be used for something else.

relaxandsmile:
The most important thing here is that government is not spending billions to protect Naira. That billions will will be used for something else.

You don't understand that.
The dollar is not a grant. They are allocation to bureau de exchange not for Free

The same group of paid people that supported Buhari through out his tenure has suddenly turned against him because their principle is in control.


Make una continue.

Pathetic.... more burden on the poor, the inflation is fast rising.

4Play:


In the long run, the naira will continue to fall until we get inflation well under control.

The Tinubu propagandists should have held off on talking about naira strength as this is not well founded.

Why the crash? Should the CBN defend the Naira? Should a new competent CBN head, preferably a western trained economist be appointed? Or is this Naira Shock therapy?

Edit: I chose to re-read the article and it provided reasons for the problem. The revelation here is that there was simply pent up demand for forex, a massive overhang from the Emefiele era. The CBN might need to increase supply of dollars to the market to cool it down.

Would an increase in interest rates by the CBN cool it down, or should the Naira be allowed to find its true value no matter how low it goes?

grandstar:


Why the crash? Should the CBN defend the Naira? Should a new competent CBN head, preferably a western trained economist be appointed? Or is this Naira Shock therapy?

Edit: I chose to re-read the article and it provided reasons for the problem. The revelation here is that there was simply pent up demand for forex, a massive overhang from the Emefiele era. The CBN might need to increase supply of dollars to the market to cool it down.

Would an increase in interest rates by the CBN cool it down, or should the Naira be allowed to find its true value no matter how low it goes?

I think people should worry less about the naira losing value, unless it's falling dramatically. A gradual decline to N1000 to $1 over the next 4 years doesn't worry me. If it happens within months, that will be troubling.

In the long run and given high inflation in Nigeria, naira will continue depreciating unless we overcome the inflation problem. We will need higher interest rates and restraints on fiscal spending to conquer inflation. Unfortunately, we will have go backwards to go forward but we need to be a bit cautious.

It's why I am worried about taking off fuel subsidy immediately instead of my preferred gradual elimination. There is only so much pain Nigerians can endure in such a short duration and you risk replaying the Russian/ex-Soviet states situation of the 1990s when market-led reforms at the end of the communist era were rushed through causing extreme poverty and financial crises and discrediting the reform process.

pafra:
Nigeria are in for a good time.

How can you float the dollar to Nigeria without increase earnings on forex?

You also went ahead and cancel withdrawal limit in domiciliary accounts when bureau de exchange rate still exist and have not been unify with bank rates.

When demand for dollar is more than the supply, rates are bound to increase.
The only solution for now is to increase foreign exchange earnings, or else, Naira to dollar might get to N1000

Do you just increase foreign earning by mouth alone? How will investors have confidence in your economy in the first place if you’re keeping multiple rate? When Mr. A can get it for $460 and Mr. C had to get it for $759 and they have to compete.

If Tinubu did not float the naira, if he keep doing like Buhari government that maintain double rates, investors won’t come and big men will continue to make money from the arbitrage. It’s a lose-lose situation.

Buhari government also thought like you. They think they can manage it by maintaining multiple rate, see where it leads to. It’s better to make it transparent and determined by market size so we can know the actual state of things and we can grow for real.

I just hope he never backs out. Even if it increase to 1000 like you said, so far there continue to be transparency, it will eventually come down coz government will think more outside the box to increase local production and import substitution can kick in for where we have some advantage to produce imported goods, and investors will eventually pour into Nigeria within 1 years if we maintain the tempo.

Tinubu is very bold. He could have taken the easy route of retaining the double rate but he instead went for the touch decision that will yield future benefit. I won’t judge him or condemn him for just 3 weeks tenure. 1 year should be a better judge of where all this will lead.

You don’t expect everything to just turn to $1 to 400 naira in 3 weeks like Tinubu is a magician.

APC a party built on propaganda