Due to demand pressure on the parallel market, also known as the black market, the naira suffers 0.97 percent against the dollar at the end of the five trading days.
Following Friday’s trading, the naira/dollar exchange rate closed at N520/$, compared to N515/$ the previous day at the same market.
The naira had been stable at N515/$ for the previous week before depreciating to N517/$ on Thursday due to increased demand for the greenback by end-users.
On July 28, the local currency fell sharply to N525 to the dollar after the Central Bank of Nigeria (CBN) announced that it would stop selling dollars to Bureau De Change (BDC) operators due to foreign exchange violations.
The Naira ended the week unchanged at zn411.67 per dollar at the Investors and Exporters (I&E) forex window.
However, the Naira gained 0.04 percent as the dollar was quoted at N411.50 on Tuesday, compared to the previous close of N411.67 on Monday in the official market.
According to FMDQ data, the naira suffers 0.06 percent on Wednesday as the dollar was quoted at N411.75k/$, up from N411.50k/$ the previous day.
The dollar was quoted at N411.67 on Thursday, up 0.02 percent from the previous close of N411.75/$ on Wednesday.
According to Cowry Asset Management Limited, the Naira/dollar exchange rate closed flat at N380.69/USD at the Interbank Foreign Exchange market, despite the Central Bank of Nigeria’s (CBN) weekly injections of USD210 million into the forex market.
The disbursement was broken down as follows: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises, and USD55 million was sold for invisibles.
In other news, the Naira/USD exchange rate fell for the majority of foreign exchange forward contracts, with the spot rate, 1 month, and 6 months closing flat at N379/USD, N412.23/USD, and N421.66/USD, respectively.
However, the two-month and three-month exchange rates increased by 0.07 percent and 0.06 percent, respectively, to close at N413.77/USD and N415.50/USD, respectively, while the one-year contract increased by 0.12 percent to N434.37/USD.
“We anticipate that the I&E FX rate will trade around current levels, depending to some extent on the level of external reserves.” However, as demand for foreign exchange rises, we may see a sustained exchange rate differential between official channels and the parallel market. “In the medium term, we expect to see a moderation in exchange rates due to anticipated foreign currency inflows from Eurobond issuance of USD6.2 billion and the International Monetary Fund (IMF) SDRs (Special Drawing Rights) of USD3.4 billion,” Cowry Asset analysts said.
Within the week the CBN issued a warning to the public against Naira abuse. Consequently, the Apex bank said it is collaborating with the Nigeria Police, Federal Inland Revenue Service (FIRS), the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU) to prosecute Naira abusers.
This was disclosed in a statement signed by Osita Nwanisobi, acting director, corporate communications, on Tuesday.
The CBN said this is a response to the activities of persons, who flagrantly abuse the legal tender by hurling wads of Naira notes in the air and stamping on the currency at social functions.
According to the CBN, there have also been cases where the Naira suffers in the hands of people mishandling the Naira, deface it, hawk the currency at parties and reject the currency in some instances.
The regulator stated that, contrary to the practice of these unpatriotic individuals, disrespecting the currency in which citizens’ trade is neither cultural nor moral.
“For the avoidance of doubt, Section 21(3) of the Central Bank of Nigeria Act 2007 (As amended) states that “spraying, dancing, or matching on the Naira or any note issued by the Bank during social occasions or otherwise howsoever shall constitute abuse and defacing of the Naira or such note and shall be punishable under the law by fines, imprisonment, or both.”
As a result, the CBN warned Nigerians, particularly those attending social functions such as birthdays, weddings, and funerals, to stop disrespecting the Naira or risk being arrested by law enforcement.
“The Naira is our official currency and a symbol of national pride. Let us respect it and treat it with care,” the statute says.
