$78m FX deals recorded as naira closes at 770/$

Nigeria’s legal tender, the naira, closed at N770 per dollar at the investors and exporters window on Monday, beginning the week on a fragile front as the recent central bank reforms take effect on the market.

The Monday closing rate, according to FMDQ Securities Exchange Limited, represents a 16.1 percent depreciation from the N663 recorded on the last trading day (Friday).

Despite the naira’s weak performance, data on FMDQ shows that investors traded about $78 million deals on the I&E window.

The currency is yet to gain stability following changes implemented by the federal government in Nigeria’s foreign exchange market.

On June 14, the Central Bank of Nigeria announced the unification of all segments of the FX market, effectively floating the naira.

The policy meant that all FX windows were collapsed into the I&E window.

“This means all eligible FX transactions shall only be done via the I&E window, all other windows cease to exist.

“The I&E market functions by a willing buyer, willing seller system, where an entity with demand for FX seeks out another entity with FX to sell at an agreed price through an authorised dealer.

“In this model, rates are usually agreed by both parties,” the CBN had said.

Following the apex bank’s directive, the naira depreciated, trading at N755 per dollar — but later appreciated to close at N664.

In an interview with Bloomberg in Morocco, Kingsley Obiora, deputy governor of the apex bank, said the CBN will further ease controls “in the next couple of weeks” to help determine a new level for the naira.

On whether the apex bank expects the official and parallel-market exchange rates to converge soon, Obiora said: “I don’t think it will take a long time.”