Despite starting the day at N675/$1, the parallel market exchange rate between the naira and the US dollar has risen above the N700/$1 mark on Wednesday, July 27th, 2022. According to Bureau De Change operators in Lagos State, this is the case.
Similarly, the cryptocurrency P2P Exchange market rate has fallen to N702.8/$1, a 5.4 percent depreciation from the previous trading session's rate of N667/$1. The naira has been under tremendous pressure in recent weeks, falling from an average of N618 to a dollar two weeks ago.
The recent uncontrolled uptrend in the market has been attributed by Bureau De Change operators to a lack of FX and an increase in demand. Similarly, some bank users with FX in their domiciliary accounts told Nairametrics that they have been unable to withdraw funds from the bank due to tightened liquidity.
In the same vein, the official market exchange rate has recently depreciated to N430/$1, despite recording an average rate of N416/$1 the previous year. This comes on the heels of tighter liquidity at the Investors and Exporters window.
In order to combat rising inflationary pressures and encourage FX inflows into the economy, the Central Bank raised the benchmark interest rate to 14 percent in July 2022, following a similar 150 basis point increase in May.
Despite the move by the apex bank, the exchange rate has yet to moderate, putting additional strain on the country's external reserves. Meanwhile, the Central Bank announced that the external reserve increased by $620 million in June 2022 due to non-oil inflows.
According to the CBN's Monetary Policy Committee communiqué, "the MPC noted that foreign exchange inflows through the RT200 FX Programme increased significantly to approximately US$600 million as of June 2022 in Q1 and Q2 2022."
Members also noted an increase in Diaspora remittances as a result of the Naira for Dollar incentive and urged the Bank not to give up on efforts to encourage foreign exchange inflows to Nigeria.