Forex Market Shift: Naira Bounces Back To N1,400/$

Eko Hot Blog reports that the Naira on Wednesday showed a remarkable rebound against the US dollar in both the official and parallel markets.

The local currency notably strengthened against the greenback, particularly in the black market.

This came as the Central Bank of Nigeria announced the final settlements of all valid foreign exchange backlogs, fulfilling a key pledge of the apex bank governor, Mr. Olayemi Cardoso, to process an inherited backlog of $7bn in claims.

The Acting CBN Director, Corporate Communications, Mrs. Hakama Sidi Ali, who disclosed this in Abuja on Wednesday, recalled the central bank had recently cleared $1.5bn from the backlogs.

On Wednesday, the naira closed trading at 1,410/dollar at the parallel and N1,492 at the official Nigerian Autonomous Foreign Exchange Market, according to data compiled from the FMDQ Securities Exchange.

The gain recorded by the naira at the official market represents an appreciation of N68 or 4.5 per cent, from the N1,560/$1 recorded on Tuesday at NAFEM, and a gain of 13.5 per cent or N190 at the parallel market.

According to findings by The PUNCH, the exchange rate has been gaining lately as speculators begin to dump their dollar stocks, following waning demand by prospective buyers amid CBN clampdowns.

A string of circulars by the Central Bank of Nigeria in recent weeks and months have helped to plug leakages and blocked loopholes previously explored by currency speculators and racketeers.

Also, the recent clampdowns on the activities of illegal BDC operators in Lagos, Abuja and Kano by the operatives of the Economic and Financial Crimes Commission have helped to reduce the volatility of the naira.

A Bureau De Change Operator at Wuse 2, Abuja, Ibrahim Yahu, said on Wednesday that the greenback was bought at the rate of N1400/$1 and sold at N1500/$, allowing operators to make a spread of N100/$1.

He said, “The highest I can buy from you is N1400/$ but we are selling at N1500/$.

He noted that some persons bought at the rate N1,300/$ during the daily trading activity.

Another currency trader, Malam Musa Yahyah, at the Central Business District in the FCT, expressed mixed feelings about the new rate, stating that some traders were forced to sell at loss due to a waning demand for the greenback.

In Lagos, a currency trader at Allen Avenue, Ikeja, Mustafa Ibrahim, said the waning demand for the dollar, partly driven by the commencement of dollar sale to BDC operators at the rate of 1,300/dollar, had further weakened demand for the greenback.

He said most traders bought and sold the dollar at N1350 and N1450 on Wednesday. According to Ibrahim, the local currency may reach a new high of 1,200/dollar in weeks if the trend continues.

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