Currency Dealers Open Up on Why Dollar is Crashing as Naira Appreciates in Official, Black Markets
- Bureau de Change Operators of Nigeria (ABCON) has disclosed the reason the naira is gaining against the US dollar
- ABCON president Aminu Gwadabe stated that the various FGN bonds by the Nigerian government CBN’s OMO auctions are responsible for the naira’s upsurge
- In March 2024, the apex bank issued treasury bills and embarked on OMO operations with high interest rates
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Bureau de Change Change Operators of Nigeria (ABCON) has revealed that the oversubscription of recent Federal Government of Nigeria (FGN) bonds and other securities positively impacts the naira.
The development has led to the recent appreciation of the naira against the US dollar.
Source: Getty Images
Aminu Gwadabe, ABCON president, disclosed this during an interview with the News Agency of Nigeria (NAN), where he praised CBN’s plethora of reforms, which are meant to control inflation and boost the naira.
PAY ATTENTION: Click “See First” under the “Following” tab to see Legit.ng News on your Facebook News Feed!
Clearing FX backlogs affecting the naira positively
The ABCON leader said that clearing Forex backlogs by the apex bank also has a massive effect on the naira, which improved its prospects against major currencies.
Gwadabe said:
“We are also seeing how they use the securities to attract foreign investments, which are oversubscribed. That also has a lot of positive impact on the exchange rate.”
“We have also seen how they took the bold decision to reinstate the BDCs window to deepen the market, which has broken the camel’s back,”
“As we speak, as of today before the meeting, the exchange rate of the naira to the United States dollar is awesome. It’s reassuring and shows that the CBN has the muscles and arsenal to protect the value of the naira.”
CBN takes action to improve the naira’s performance
According to reports, there has been a spike in the demand for Nigerian Government Treasury bills and the Central Bank of Nigeria’s (CBN) Open Market Operation (OMO).
These securities have drawn interest from international investors, leading to a surge in demand due to their high-interest rates.
The CBN recently sold N1.06 trillion worth of OMO bills, with interest rates as high as 21.5%. The apex bank also received bids totalling N1.14 trillion.
During a Treasury bills auction in March 2024, the CBN sold 1.3 trillion worth, with an interest rate of 21.5%.
The naira has appreciated against the US dollar for five consecutive days, crediting CBN’s efforts.
Official and parallel markets close gaps
The Nigerian currency gained in the parallel market on Friday, March 22, 2024.
The naira gained two per cent from the N1,500 recorded on March 20, 2024.
Bureau de Change (BDC) operators quoted the buying rate of the dollar at N1,430 and the selling price at N1,470 per dollar, leaving a disparity of N40.
The naira falls marginally against the dollar
However, at the Nigerian Foreign Exchange Market (NAFEM), the naira dipped by 3.58% to trade at N1,431 on Friday, March 22, 2024, from the N1,382 per dollar it traded on March 21, 2024.
Traders quoted the dollar at an intraday high of N1,468 per dollar and a low of N1,301 in the official market.
Naira’s gains come amid increased Forex inflows of $1.2 billion in February, as reported by the CBN governor, Olayemi Cardoso.
Financial experts believe the backlogs hurt the naira as investors have avoided the Nigerian economy.
New exchange rate emerges as naira gains
Legit.ng earlier reported that the Nigerian currency, the naira, gained over N80 against the US dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, March 21, 2024, following the announcement by the Central Bank of Nigeria (CBN) that it had cleared all valid FX backlogs.
Data from NAFEM showed that during the mid-day trading, the naira traded at N1,382.35 per dollar before closing at N1,453 per dollar as against the rate it closed on Wednesday, March 20, 2024, at N1,536.83.
PAY ATTENTION: Unlock the best of Legit.ng on Pinterest! Subscribe now and get your daily inspiration!
Source: Legit.ng
Pascal Oparada (Business editor) For over a decade, Pascal Oparada has reported on tech, energy, stocks, investment, and the economy. He has worked in many media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng
Aminu Gwadabe (President at Association of Bureaux de Change Operators of Nigeria) Alhaji Aminu Gwadabe is the president of the Association of Bureau De Change Operators of Nigeria (ABCON) that represents the interests of licensed Bureau de Change operators in Nigeria. Gwadabe comments on issues relating to the foreign exchange market, currency exchange rates, and economic policies in Nigeria over the years.
