Naira Up Against Fresh Threats From Two Crypto Exchange Platforms

Naira is currently up against fresh threats from two crypto exchange platforms.

 

NewsOnline Ngeria reports that the Naira appears to be up against a fresh threat from two crypto exchange platforms, just six weeks after President Tinubu Government’s clamp down on Binance operations in Nigeria.

 

This Nigeria news platform recalls that the national currency had slumped badly in the forex market in the weeks preceding the clamp down on Binance, exchanging for as much as N1,950 in mid-February.

But soon afterwards, the Naira started to recover and was at a time N1,200 until the middle of last week when it lost some grounds to the dollar again.

Observers blamed its earlier misfortune on alleged manipulation of the market by Binance and are citing the new crypto exchange platforms BYBIT and BITGET as the cause of the latest slip.

 

ALSO: CBN Governor Olayemi Cardoso Gives Fresh Update On War Against Forex Crisis

 

An investigation also showed that many speculators who had invested in the dollar in the hope that the naira would go further down are now counting their losses.

 

On Monday last week, the Naira was N1,100 to a dollar at the black market. It depreciated to N1,148 by Tuesday and N1,169 on Friday. Observers believe this is on account of the operations of the peer to peer platforms and say government must step in to stop the naira slide.

Following the recent recovery of the naira, the global investment banking, securities and investment management firm Goldman Sachs Group, Inc. rated it one of the best performing currencies around the globe.

 

The firm had initially predicted a naira to dollar exchange rate of 1,200 by year-end 2024 but later said the Nigerian currency could exchange for 1000 to a dollar or even below provided the authorities are able to maintain the tempo of their economic reforms.

This bullish forecast, it said, followed capital inflows and interest rate adjustments, aiding the naira recovery from substantial losses incurred due to two devaluations since June, following the government’s relaxation of currency controls.

Currency speculators count losses as naira rises against dollar

 

It was gathered that many speculators have lost money following the recent resurgence of the naira.

 

Such speculators had invested massively in the dollar in the hope that naira would depreciate further.

An investigation by our correspondent revealed that many of the currency hoarders who had envisaged that the value of the naira would depreciate further as low as N2,000 or more to $1 as anticipated in mid-February, have all being proven wrong as the nation’s legal tender has witnessed a rebound.

 

Some black market operators reportedly lured some of their patrons to dollarise their cash as the naira, in their calculation, would depreciate further.

 

However, the naira recorded a rebound even beyond the expectations of many, such that the gains of the naira have been the loss of many currency speculators who borrowed money to dollarise their assets.

Confirming this development, one of the BDC operators in Mushin, Lagos, who simply gave his name as Adamu, said: “Some BDC operators lured individuals to buy dollars when it was between N1700-N1800 to the dollar. But now that the naira has recorded a rebound, most of them are counting their losses, no doubt.

 

“It’s very painful that they had to stake a lot of their hard earned money to do currency speculation.”

 

Chukwudi Iwuchukwu, a financial lawyer, noted that some individuals who bought N10 million worth of dollars at the black market on February 24 suffered huge losses as the current value of their liquid asset is worth only half the sum.

 

“If you bought N10 million worth of dollars at the black market on February 24, it’s currently worth about N5 million,” he said.

 

Writing on his former X handle, A. Ayofe @abdullahayofel last Tuesday recounted the experience of one of the currency speculators who is now in debt as a result of his wrong investment decision.

 

“Someone I know borrowed N18 million from a money lender to buy $10,000 at N1,800 to $1 in February to pay back N19 million in May (three months) when the dollar gets to say N2,000 or more.

 

“Today, that N18 million is worth N11 million at N1,100 to $1. He is now looking for where to get extra N8 million to clear his debt as the three months is fast approaching.

 

“He used his bungalow as collateral. The problem now is that before May, the money could further reduce to N9 million at N900 to $1, making it impossible to retrieve his house.”

 

Dr. Aminu Gwadabe, the National President of Association of Bureaux de Change Operators of Nigeria (ABCON), said the otherwise awkward situation of the naira in the last few months has given way to optimism.

 

He said: “It is really exciting and interesting as we witnessed profound and significant naira rebounds faster than expected.

 

“It is a triumph of reality over behaviours that have no economic fundamentals.”

 

Gwadabe said all those who lost their investable funds during this period have to accept their fate.

 

“As regards the complaints of people borrowing money to speculate and make a margin, my take is that for any economic activity, there is reward and there is loss.

 

“So it is a gamble where you either win or lose. They should move on and next time be careful in jumping into what they cannot control.”

 

On the way forward, the ABCON boss appealed to the CBN and the fiscal authorities to proactively continue to induce confidence in the economy, strengthen stakeholders engagement, quick and fast responses including service delivery.

 

“Other hanging fruits include harnessing proceeds of diaspora remittances to inject liquidity through the BDCS. There should also be concerted efforts from all agencies of government to de-risk non-oil exports products to have a paradigm shift in our sources of foreign exchange to boost our external buffers.”

 

He added: “The excellent job of the security agencies in tackling corruption and money laundering should remain the cornerstone of this government. Above all, we must all as Nigerians have a change of mindset.”