The exchange rate between the naira and dollar sold for as high as N551/$1 on the official spot rate of the Investor and Exporter window of the FMDQ.
This is the second straight day that the exchange rate has sold for as high as N551/$1 suggesting that a pattern is likely in the offing.
Nairametrics can also confirm that the rate was associated with a trade on both days respectively.
The exchange rate between the dollar and naira often trades at intraday highs and lows in line with market realities however, the rate still closes at the official price preferred by the apex bank.
For example, despite exchanging for as high as N551/$1, the exchange rate at the FMDQ still closed at N462/$1 while the lowest rate traded during the day was N460/$1.
Record rate – At an exchange rate of N551/$1, this is the highest intra-day high that has ever been recorded on the official exchange rate market otherwise known as the Investor and Exporter Window.
Prior to this week, the highest intraday high recorded is N462/$1 almost equal to the official closing day rate. At N551/$1 the disparity between the intraday high and the closing rate is a record N91 to the dollar.
Meanwhile, the exchange rate at the black market continues to trade at about N750/$1 a whopping N200 disparity to the intra-day high.
In terms of market turnover, about $125.6 million and $62.6 million were traded on the 20th and 21st of March respectively, when the exchange rate sold for as high as N551/$1.
What this means?
The intraday high of N551/$1 is not an official indication of a devaluation of the exchange rate between the naira and the dollar.
Rather, the official indication of a devaluation or adjustment of the exchange rate is when the closing prices change drastically. However, allowing the rate trade at N551/$1 does suggest the market is now allowing trades to go through at this price.
It is important to also note that the central bank’s RT 200 policy is an incentive for companies with export proceeds to repatriate their dollars into the official market at the official exchange rate.
Sources suggest that while the money passes through at the official rate, parties to the transaction end up exchanging the differential based on the parallel market rates.
CBN is positive about exchange rate policies
Despite the wide disparity between the official and parallel market rates, the central bank has continued to espouse its RT 200 policies and its naira4dollar scheme.
At the recent briefing of the monetary policy communique, the apex bank stated that the policies will improve the exchange rate situation.
“It maintained optimism that, the continued progress made with the RT200 FX program, Naira-4-dollar and other policies targeted at attracting diaspora remittances, would continue to help improve accretion to the external reserves and improve liquidity in the foreign exchange market.” CBN
Will devaluation occur?
Nairametrics research opines a devaluation could occur at the official exchange rate when the new government takeover at the end of May.
The Tinubu/Shettima administration has stated its desire to collapse the multiple exchange rate market though it may not have included the parallel market.
However, most analysts see it as a sign that the attempt will be to allow the official market to reflect a more market appreciation of the value of the naira against the dollar to instill confidence. Doing this could therefore require an adjustment of some sort at the official market.
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