The trading landscape on the Investor & Exporter forex window witnessed a notable upswing, registering a robust 46.69% increase to $123.25 million on Monday, a substantial surge from the $84.02 million recorded on the preceding Friday.
Despite this considerable uptick in trading activity, the value of the naira experienced a corresponding decline, depreciating by 1.96% to N795.41/$ by the close of Monday’s trading session.
This downward shift follows the N780.14/$ rate observed on Friday, as reported by data from the FMDQ OTC Securities Exchange.
Throughout Monday’s trading, the naira displayed a fluctuating trajectory, oscillating between a high of N1,099/$ and a low of N701/$.
Simultaneously, on the parallel market, the naira sustained its downward trend, depreciating by 4.55% to settle at N1,150/$, down from the N1,100/$ rate observed on the preceding Friday.
Looking ahead, Economist Intelligence provides insights into the future trajectory of the naira, projecting a closure at N810/$ on the official market by the end of 2023.
This projection is underpinned by the Central Bank’s approach of maintaining control over the exchange rate, coupled with various economic pressures.
The controlled exchange rate strategy involves limiting access to foreign exchange sales for banks and other dealers deviating from a preferred rate.
However, the Economist Intelligence report notes that this policy, coupled with other factors such as deeply negative short-term real interest rates, may continue to exert pressure on the naira.
Despite the earlier move to allow a more flexible exchange rate in June, the report suggests a return to a more guided approach by the Central Bank.
It remains to be seen how these dynamics will unfold, especially with the report indicating a lack of demonstrated appetite for an orthodox monetary policy to address underlying economic challenges.
