Selling Forex to BDCs will add more liquidity to the retail end of the Forex market.
The Nigerian exchange rate on the NAFEX window closed marginally at N385.67 during intraday trading on Friday August 28, 2020. In another development, the parallel market exchange rate remained stable on Friday when it closed at N477 / USD 1.
Forex Sales: Forex sales in the Investors and Exporters (I&E) window fell significantly by 72% on Friday, August 28, 2020, following the profit posted the previous day of trading.
According to data collected by Nairametrics from FMDQ, Forex sales decreased from $ 43.16 million on Thursday, August 27, 2020 to $ 12.09 million on Friday, August 28, 2020.
The decrease occurs one day after the increase in Forex sales on the previous trading day due to an improved dollar supply.
This exacerbates the persistent volatility of the currency market and the scarcity of the greenback. The supply of dollars has been declining for months due to low oil prices and the lack of foreign capital inflows into the country.
The average daily forex sale last week was $ 71.13 million, a significant increase from the previous week's $ 24 million. The day's foreign exchange turnover is still a long way from the $ 200 million mark seen last week.
Total forex trading on the NAFEX window was $ 937 million in July compared to $ 875 million in June.
The exchange rate differences between the official NAFEX rate and the black market rate remained up to N91.33. Nigeria maintains several exchange rates which include the official CBN rate, BDC rates, SMIS, and the NAFEX (I&E window). The large inequality between the two rates has created tremendous arbitrage opportunities for some highly connected individuals.
Market observation
Parallel Market: In the unofficial black market, the naira remained stable against the dollar, closing at N477 / $ 1 on Friday, according to information from Abokifx, a well-known FX tracking website. This was the same rate it exchanged on Thursday August 27th.
NAFEX: The naira appreciated against the dollar in the window for investors and exporters (I&E) on Thursday, closing at N385.67 / USD 1.

This corresponds to a profit of 8 kobo compared to N386.75 / USD 1 exchanged on the previous trading day, Thursday, August 27, 2020.
The opening price on Friday was N386.93 per dollar. That's a 78 kobo drop from the N386.15 versus a dollar posted on Thursday.
The N386 versus the dollar is the highest price during intraday trading before closing at N385.67. It also sold for just N380 / $ 1 during intraday trading.
Forex is sold at different prices and at different times of the day.
The central bank turned to the unification of exchange rates three weeks ago after devaluing the official rate to N380 / USD 1.
Despite the volatility and shortage of foreign currencies, the naira appears to be stable in the currency markets. The dollar shortage has forced banks to drastically lower the dollar spending limits on their debit cards.
The local currency has remained stable for a few days as the Central Bank of Nigeria put some measures in place on exporters and importers to increase the supply of dollars in the foreign exchange market and reduce the traders' high demand for foreign exchange.
Nairametrics reported that the CBN had announced in a circular on Thursday that it would resume the gradual sale of foreign currency to licensed Bureau De Change (BDC) operators effective dated as part of efforts to improve access to foreign currency, particularly for travelers August 31. The CBN directed the BDC operators not to resell more than N386 / $ 1 to end users.
The resumption of selling Forex to BDCs will add liquidity to the retail end of the Forex market and discourage hoarding and speculation.