Redesign Policy: Naira gains against dollar

On Monday, March 06, 2023, at the Investors and Exporters window, the naira was traded at a rate of ₦461.33 per dollar, indicating a 0.09% increase from the rate of ₦461.75 per dollar at the close of business on the previous Friday, March 03.

The open indicative rate for the day, Monday, was ₦461.50 per dollar. The naira reached a high of ₦462.31 per dollar before eventually settling at ₦461.33 per dollar.

The lowest rate at which the naira was sold for was ₦446 per dollar. At the official Investors and Exporters window, a total of $108.01 million was traded.

Black market rate: On Monday, naira exhibited a marked appreciation against the US dollar on the black market. It reached an average trading rate of ₦760/$1, representing an upward trend of 1.05% from its previous trading session rate of ₦768/$1.

Cryptocurrency rate: Alternatively, the exchange rate between the naira and the US dollar experienced a slight decline of 0.18% at the cryptocurrency peer-to-peer exchange market. Last Friday morning, the average rate was ₦741/$1, compared to the previous day's rate of ₦739.7/$1.

Currency redesign policy: Effectively implemented, the currency redesign largely caused a fall in money supply. The central bank said that the redesign would help bring down inflation.

The relationship between inflation and forex: Inflation can affect exchange rates by influencing the supply and demand for a country's currency. When a country experiences high inflation, its goods and services become relatively more expensive compared to other countries with lower inflation rates. This can reduce the demand for the country's exports, causing a decrease in the demand for its currency.

Additionally, high inflation can erode the purchasing power of a country's currency, making it less attractive to foreign investors. This can lead to a decrease in the demand for the country's currency, which can cause its value to depreciate relative to other currencies.