BDC Operators React as Traders Predict N1,400/dollar This Week
- Aminu Gwadabe, president of ABCON, responded to the possibility that the naira will hit N1,400 this week
- This occurred as the value of the naira has been falling since the CBN introduced the new electronic FX trading platform
- Given the dollar's recent downward trajectory, street currency traders are worried that it would fall to N1,400 this week
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), has responded to the prospect of the naira reaching N1,400 this week.
Source: Getty Images
Since the Central Bank of Nigeria (CBN) launched the new electronic forex trading platform, the value of the naira, Nigeria's currency, has been appreciating.
Last Friday, traders responded to the CBN's new FX framework by offloading dollars, which caused the naira to rise to N1,515 per dollar on the parallel market.
According to CBN data, the naira also increased 2.08 percent, or N32, in the official market, closing at N1,535 as opposed to Thursday's rate of N1,567.
Possibility of naira hitting N1,400/$
BusinessDay reported that street currency traders are concerned that the dollar may appreciate to N1,400 this week, given its current trend.
Reacting to this, Gwadabe said,
“It is achievable considering the enhanced investor confidence, but I want to believe further appreciation levels may not go beyond N1500/$.”
According to Gwadabe, a number of reasons have contributed to the recent appreciation of the naira.
He cited a combination of market reforms, increased foreign exchange inflows, and investor confidence as the main forces behind the currency's recovery.
“The increasing level of confidence among portfolio investors has resulted in substantial dollar inflows, as evidenced by the oversubscribed bond issues. This has significantly helped the naira recover,” Gwadabe stated.
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He cited increased diaspora remittances and better crude oil and gas production, which have strengthened Nigeria's foreign exchange reserves.
“Diaspora remittances have risen to about $600 million monthly through international money transfer operators (IMTOs), contributing to the naira’s strengthening,” he noted.
Gwadabe also acknowledged the FX Trading and Reporting System (EFEMS) for promoting accountability, openness, and visibility in the foreign currency market.
“The EFEMS platform has ushered in much-needed reforms, creating a more stable and predictable market environment,” he added.
Rewane advises CBN to stabilise naira
Legit.ng earlier reported that in order to lessen inflationary pressures, Bismarck Rewane, CEO of Financial Derivatives Company, has urged the Central Bank of Nigeria (CBN) to concentrate on stabilizing the naira and regulating the expansion of the money supply.
Speaking at the Parthian Group-hosted 2024 Macroeconomic Outlook Forum in Lagos, Rewane emphasized the discrepancy between the official and alternative exchange rates in Nigeria.
He pointed out that market speculation and limitations in FX supplies are to blame for the discrepancy.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
Source: Legit.ng
