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Currency Speculation Battle: Banks Sell $172 Million Amid CBN And EFCC Collaboration

Published

10 months ago

Feb 22, 2024.

Eko Hot Blog reports that the naira gained slightly against the dollar on the Nigerian Autonomous Foreign Exchange (NAFEX) market on Wednesday, closing at N1,542.58/$ from N1,551/$ on Tuesday.

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This represents a 2.9% appreciation from Monday’s rate of N1,598.54/$, according to data from the FMDQ Securities Exchange.

The foreign exchange turnover increased to $172.14 million on Wednesday, up from $66.43 million on Monday and $117.32 million on Tuesday. Banks sold approximately $172 million on Wednesday, about 47% more than Tuesday’s $117 million.

While banks dominate forex sales on FMDQ, the Central Bank of Nigeria (CBN) and multinationals, especially oil firms, also participate. However, the closing NAFEX rate further widened the gap between official and parallel market rates to over N300.

On Wednesday, the naira fell to N1,900/$ on the parallel market, fueling concerns over round-tripping. Bureau de Change operators predicted the currency could reach N2,000/$ by next week amid high dollar demand.

The CBN and Economic and Financial Crimes Commission (EFCC) are battling currency speculators to restore exchange rate stability and boost forex liquidity. The EFCC raided the Wuse Zone 4 market on Wednesday searching for speculators.

President Bola Tinubu said his administration is working to raise $10 billion to increase liquidity and stabilize the naira. The CBN has introduced various policies, like ordering banks to sell excess dollar stock, to boost supply.

However, analysts faulted the huge intra-day gap between N1,755/$ and N1,050/$ on NAFEX, saying it indicates a need for more transparency. Bureau de Change Association President Aminu Gwadabe said FMDQ, 90% owned by banks, needs more disclosure on who is trading.