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Naira Plummets to 1,030/$ as Speculators Fuel Economic Turmoil

November 7, 2023

The naira crashed against the dollar on Monday, falling to 1, 030/$ on the average in the parallel market, losing the momentum it gathered last week.

This represents a N80 loss or a 8.42 per cent decline of the local currency compared to the N950 it closed the week at last Friday.

This is also the first time the naira is falling since the Central Bank of Nigeria began to clear some of its FX backlog last week.

Currency traders, also known as Bureaux De Change operators, told The PUNCH that the naira was trading at between N990 to N1,030/$.

A trader who gave his name as Awolu said, “The dollar is N995 if you want to sell. If you want to buy from me, it is N1,020.” Another trader, Kadri, added, “The dollar is N960 if you want to sell. If you want to buy, it is N990.”

According to the President of the Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, the dollar has gained against the naira because people who had bought it at a higher price are resisting its fall following the Central Bank of Nigeria’s move last week.

Last week The PUNCH reported that the apex bank has commenced the payment of outstanding matured FX forwards owed to various banks.

This was meant to boost liquidity in the foreign exchange market following weeks of the naira falling to record lows. According to the Minister of Finance, Wale Edun, the amount of overdue forward payments was about $6.7bn.

This move quickly led to the appreciation of the naira with the naira gaining about N220 after closing the week at N950/dollar at the parallel market. The naira has now seemingly lost this momentum. Confirming the closing price of the dollar to The PUNCH, Gwadabe said, “In the afternoon, it was N1,015 and N1,020/$. It closed at N1,030/$

He highlighted, “Speculators are always looking at elements of sustainability. Once they sense that it (the injection) is not continuous, they begin to react. They begin to react. It is the reaction of the market we are witnessing. Also, there is resistance. There are people that bought at a higher price that this does not favour. People are not willing to take further losses.

“The only way we can continue to achieve the rate is by continuing to send confidence to the market. Tell the market that another window is opening, and boost liquidity. The parallel market is where the retail end is. And as of now, there is no information as to how liquidity will come into that sector. All we have is that BDCs will be included to advance the official foreign exchange market. We cannot wait in the FX market.”

Also, the naira declined by 3.6 per cent at the official market to close at N809.02 to the dollar on Monday from N780.23/$ on Friday according to details on FMDQ OTC Securities Exchange.

Credit: Punch

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