Dollar supply, which rose sharply to $407.66 million on Thursday, the same day the Central Bank of Nigeria (CBN) lifted the forex ban on 43 items, dropped by 86.99 percent on Friday.
Data from the FMDQ showed that the dollar supply, which reflected the volume of transactions at the Investors and Exporters (I&E) forex window, declined to $53.02 million on Friday from $407.66 million the previous day.
The CBN, on Thursday, restored the 43 items prohibited from access to foreign exchange (FX), eight years after, a move seen to usher in a single exchange rate.
The Naira fell by 0.75% to N764.86 per dollar on the first trading day after the lifting of the FX restrictions, compared to N759.20/$1 on Thursday at the I&E window, data from the FMDQ indicated. Willing buyers and willing sellers quoted the dollar at N799.90 as the highest bid and N475, the lowest bid rate.
At the parallel market, also known as black market, the Naira lost 0.86 percent (N9) to the dollar, which was quoted at N1, 049 on Friday. This was weaker than N1, 040 traded on Thursday at the black market.
The CBN said as part of its responsibility to ensure price stability, it will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time. As market liquidity improves, these CBN interventions will gradually decrease.
According to the data on the CBN website, Nigerias external reserves have declined to $33.22 billion as of October 11, 2023.
A report by Cowry Asset Research noted that oil prices surged by nearly 4% on Friday, following the United States adoption of a more stringent approach to Western sanctions against Russia. This development added to the mounting concerns about oil supply disruptions, particularly in light of escalating tensions in the Hamas-Israel conflict.
The combination of these factors contributed to the substantial increase in oil prices. Additionally, the price of Nigerian Bonny Light crude oil closed positively at $95.59 per barrel from $93.26 per barrel.
Analysts at Cowry Asset Management Limited said the decision by the CBN to lift FX restrictions on the banned 43 items is seen as a positive development for Nigerias economy and the FX market, and it is expected to help stabilise the Naira by reducing demand pressure across markets.
