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Breaking:Exchange rate worsens to N820/$1 at parallel market ahead of MPC meeting

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The exchange rate between the naira and the US dollar closed at N795.28/$1 at the official Investor and Exporters window on Monday, 17th July 2023. 

This compares to N820/$1 traded by BDC operated on the same day at the unofficial I&E Window. 

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The official exchange rate also improved from the N803.9 per dollar that it traded at on Friday. 

Meanwhile,  N820/$1 traded at the parallel market is weaker than the average rate of N815/$1 recorded last Friday, according to Nairametrics survey.

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MPC Meets today

The monetary policy committee of the central bank is expected to meet on Tuesday and Wednesday to deliberate on the economy.

  • This will be their first time meeting since the revision to the forex market was introduced. It is also the first meeting without CBN Governor Godwin Emefiele.
  • The committee will be expected to address the effect of monetary policy tools on rising inflation which is the core mandate of the apex bank.
  • Analysts also expects the MPC to comment on the demand pressure hitting the exchange rate and how to address it.
  • More importantly, the monetary policy rate is expected to be the key highlight of today’s meeting. Nairametrics expects the rate to be increased to at least 19% or at the least 18.75%.
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Breakdown of data 

I&E FX window –  The exchange rate opened at N782.79/$1 and sold for as high as N832/$1.

  • The naira also reached a low of N699.50 per dollar, indicating high volatility in the foreign exchange market.
  • The exchange rate between the naira and the US dollar has closed at an average of N768.38 to a dollar for the first eleven trading days of the month, in contrast to the average rate of N524.21/$1 in the same period of the previous month
  • The turnover recorded at the I&E window decreased by 26.33% to $34.55 million, from the turnover of $46.90 million traded last week Friday.
  • The total turnover that exchanged hands in the last eleven trading days is $849.04 million, compared to the turnover value of $1.59 billion recorded in the same period in June 2023. 
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Parallel market – The Naira-US dollar exchange rate at the unofficial parallel market on Monday depreciated to N820/$1, compared to the average rate of N815/$1 on Friday.

  • This represents a record high in the black-market exchange rate against the naira, as demand for dollars continues to pile pressure on the black market.
  • The crypto P2P exchange market recorded a slight decline in the value of the naira against the US dollar. The average exchange rate at the market was N818.65/$1, compared to N817/$1 in the previous trading session. 
  • The naira weakened against the British Pound by 3.81% on July 17, 2023, closing at N1090/£1. This was a downturn from the N1050/£1 rate recorded on July 14th, 2023, the last trading day before the weekend.  
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External ReservesAccording to the latest data from the Central Bank, the nation’s foreign exchange reserves declined slightly to $34.038 billion as of July 13, 2023, compared to $34.047 billion on the previous day.

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