Naira Plummets to 1,030/$ in Response to Speculator Activity

The naira's recent upward momentum came to an abrupt halt on Monday as it plunged to an average of 1,030/$ in the parallel market against the US dollar.
Naira exchange
Naira exchange Google

This represents an N80 depreciation or an 8.42% decline compared to its closing rate of N950 the previous Friday. Notably, this marks the first decline for the naira since the Central Bank of Nigeria initiated efforts to clear its FX backlog last week.

Currency traders, operating as Bureaux De Change operators, reported trading the naira at rates ranging from N990 to N1,030/$. For instance, one trader named Awolu mentioned, "The dollar is N995 if you want to sell. If you want to buy from me, it is N1,020." Another trader, Kadri, stated, "The dollar is N960 if you want to sell. If you want to buy, it is N990."

Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria, explained that the dollar strengthened against the naira due to those who had purchased it at higher rates resisting its decline following the Central Bank of Nigeria's actions last week.

The Central Bank had initiated the payment of outstanding matured FX forwards to various banks, a move aimed at bolstering liquidity in the foreign exchange market, which had seen the naira fall to record lows in preceding weeks. Finance Minister Wale Edun noted that the overdue forward payments amounted to approximately $6.7 billion.

These actions initially led to an appreciation of the naira, gaining about N220 after closing the previous week at N950/dollar in the parallel market. However, the naira's apparent resurgence has now subsided. Confirming the dollar's closing rate to The PUNCH, Gwadabe stated, "In the afternoon, it was N1,015 and N1,020/$. It closed at N1,030/$."

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