BusinessNaira Devalues To N410.25/$1 At Official NAFEX Window

Naira Devalues To N410.25/$1 At Official NAFEX Window

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SAN FRANCISCO, January 01, (THEWILL) – There are indications that the Central Bank of Nigeria (CBN) may have effected an adjustment in the foreign exchange rate that officially devalues the Naira at the Nigeria Autonomous Foreign Exchange (NAFEX) window from N392/$1 to N410.25/$1 on December 31, 2020.

NAFEX is the FMDQ benchmark rate for Foreign Exchange (FX) spot operations in the Investors’ & Exporters’ (I&E) FX Window.

It is designed and generated independently and objectively and published every business day at a specific time for stakeholders’ guide and in line with extant guidelines.

End-of-year trading report on the FMDQ platform showed that the Opening/Indicative rate of the Naira at the beginning of trading on Thursday, December 31, 2020 was N392.88/$1, while the closing rate was N410.25/$1.

This represents a depreciation of N17.37 or 4.42 per cent at the NAFEX window, ending a tumultuous year for the currency market which has witnessed intense pressure since the year.

The implication of this development is that companies across Nigeria which have dollars in their bank accounts will convert their balances to naira using N410.25/$1.

Spot transactions on the I&E window from January 1, 2021 will also be at the new exchange rate of N410.25/$1, suggesting that individuals and corporate organisations will need more Naira to buy the Dollar henceforth.

While the FMDQ NAFEX window reflects the new exchange rate, the official exchange rate quoted on the website of CBN remained N379/$1 as of the time of this report in the early hours of January 1, 2021.

The CBN devalued the exchange rate multiple times in the year that just ended as the apex bank strives to bridge the disparity between the official and parallel market rates.

The Naira had remained stable at the parallel market – exchanging N470/$1 in the last three days of forex trading according to AbokiFX, a daily exchange rate platform that tracks exchange rate performance outside the official window.

This is on the heels of Nigeria’s external reserve which increased by $515 million in 12 days, rising from $34.841 billion as of December 18, 2020, to $35.356 billion as of December 30, 2020.

About the Author

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Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

Sam Diala, THEWILLhttps://thewillnews.com
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

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