Naira rebounds to N1,400/$ as speculators offload forex

The naira rebounded against the United States dollar on Wednesday at the official and parallel markets, with the local currency recording a significant gain against the greenback at 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 market 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.

Findings revealed that 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.

Also, Mallam Abubakar Salisu, who sells FX at the Murtala Muhammed Airport, Lagos, said the naira-dollar exchange rate at the parallel market had been fluctuating in recent times due to the activities of the CBN and the EFCC.

“As of today, many of us bought and sold at 1,400/dollar and N1,450/dollar. The rate is still volatile but many of us are anxious to sell because we know the dollar will soon crash. The only challenge is that many us bought the FX when the rate was around N1,600, so we are concerned about the loss. We are seeking to minimise the loss,” he said.

Meanwhile, the intraday high closed at N1,620 per dollar for the spot on Tuesday while the intraday low closed at N1,350/$1 on the same day.

The daily foreign exchange market turnover increased to $268.29m from $195.13 million recorded on Tuesday.

The Central Bank of Nigeria has unveiled several monetary policies.

The latest was the new draft guidelines for Bureau de Change operators in the last two months.

Also recently, Binance, a cryptocurrency, discontinued its Naira transactions over regulatory clampdown by the Nigerian government.