Naira Appreciates To N730/$1 At Black Market

The naira has sustained its momentum at the parallel market, appreciating N710 per dollar in Lagos on Friday.

Five days after falling to N900/$, the naira has made a comeback rising to N730 /$. The local currency is now in a better position than it was before the redesign announcement.

Also: Naira Redesign: EFCC Goes After 3 Governors For Stashed Billions At Home

Newsonline reports that the development represents N115 or 13.9 percent gain compared to the N825 to a dollar it traded on Wednesday.

Bureaux De Change operators (BDCs) in the Ikeja area of Lagos, quoted the buying rate of the greenback at N700 and the selling price at N710 per dollar, leaving an N10 profit margin, TheCable reports.

The traders said there was moderation in demand for dollars by citizens.

“I have plenty of dollars in my hand but people are not buying as much as before. I have not yet sold anything today,” Abubakar, a trader at the Alade Market, Ikeja, told TheCable.

A currency trader at Victoria Island, simply identified as Musa, said he is currently buying the local currency at N700/$ and selling it for N740 per dollar on Friday morning.

He said he and some of his colleagues were recording losses because they had bought the dollar at about N800 but now have no choice but to sell for a lower amount.

“I am losing some money too but I am not selling anymore till it goes back up. They (other currency dealers) will keep and sell when it goes up,” Musa said.

Last week, the naira weakened to almost N900 per dollar, pressured by the planned currency redesign by the Central Bank of Nigeria (CBN) and the subsequent Economic and Financial Crimes Commission (EFCC) clampdown on FX dealers.

At the official market, the local currency depreciated 0.10 percent against the dollar to close at N446.10 on Thursday, according to FMDQ OTC Securities Exchange, a platform that oversees foreign-exchange trading in Nigeria.

Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), said people have realised that using the dollar as the preferred currency to store money is no longer the best option, TheCable reports.

“People were eager to buy dollars and keep them even though they don’t need them to pay school fees or anything. But now, they have burnt their fingers because the exchange rate is not stable,” Gwadabe said.

“There is also a lot of surveillance within the system. When people buy dollars from BDCs, the traders have to take the naira to the bank and answer a lot of questions. So, the traders are being cautious.”

“CBN can inject liquidity to meet legitimate demand for forex. They can also revisit the policy of suspension of FX sales to BDCs. It would go a long way to boosting the value of the local currency,” the ABCON boss explained.

Recall that the Central Bank of Nigeria, recently, announced that the N1000, N500, and N200 naira notes would be redesigned. It, however, gave Nigerians less than 100 days to “dispose” of the outdated banknotes they still had in their possession.  

Although the goal of the monetary policy is to reduce the amount of money that is not in the banking system and control inflation, the naira is now in a worse situation than before. 

Following the announcement, the local currency experienced its steepest drop against the US dollar on the black market. On October 26th, the naira was trading around N760/$1, and on November 6th, it was trading around N900/$1. 

As a result of the massive currency speculation, the CBN collaborated with the EFCC to revoke BDC licenses. The Economic and Financial Crimes Commission (EFCC) raided black market operators in Lagos and Abuja a few days after the CBN announcement. Approximately 87 forex dealers were arrested in the Federal Capital Territory, Abuja, Lagos, and Kano.