Naira Takes Big Hit Against Dollar as Currency Speculators Push Back Last Week's Gains

• The Nigerian currency has come under increased pressure as speculators escalate efforts to undermine its recent gains.
• This decline in the naira's value aligns with earlier warnings that speculators might attempt to disrupt its recovery.
• Given the naira's performance in recent days, its recent gains, especially in the parallel market, appear to be unsustainable.

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the Stock Market.

The naira has faced additional pressure as speculators intensified efforts to resist the currency's recent gains.

Following last week’s appreciation, the naira began this week with a decline, prompting currency traders to call on the Central Bank of Nigeria to sustain its efforts, warning that speculators might push back against the currency's recovery.

The naira's recent strengthening against the dollar was linked to increased market confidence, driven by the Central Bank of Nigeria's successful introduction and implementation of the new Electronic Foreign Exchange Matching System (EFEMS) on December 2.

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The appreciation of the naira in both the official and unofficial markets fuelled speculations among BDC operators that the currency could strengthen further, potentially reaching N1,400/$ in the coming weeks.

However, Aminu Gwadabe, President of the Association of Bureau de Change Operators in Nigeria (ABCON), had warned in a The Sun report that currency speculators, having incurred losses, might attempt to oppose the naira's appreciation to recover from their setbacks.

Naira stumbles again

The naira, which ended last week on a positive trajectory at N1,591 in the parallel market and N1,535 at the official window, saw a reversal on Monday, closing at N1,630 and N1,538.5 respectively, giving up part of its earlier gains.

The official market exchange rate between the naira and the dollar closed at approximately N1,545/$ on Wednesday, a 1.31% decline from the N1,525/$ recorded on Tuesday.

In the black market, the naira was exchanged at N1,685/$ on Wednesday among Bureau de Change operators, up from N1,630/$ the previous day.

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Naira resumes gain against dollar in official market, crashes in another market

The gap between the official and black market rates has now expanded to roughly N140, underscoring the growing disparity between the centrally regulated official market and the black market, which handles the majority of retail currency transactions.

Based on the naira's performance over the past few days, it seems that the recent gains in its value might not be sustainable, particularly in the parallel market, where speculative activities and market dynamics often create significant volatility.

ABCON sets operating hours for BDC operators

Meanwhile, Legit.ng earlier reported that the Association of Bureau De Change Operators of Nigeria (ABCON) has instructed its members to strictly adhere to operational business hours from 8am to 6pm.

In a memo signed by ABCON exco made available to Legit.ng, the association said defaulting members will face disciplinary action.

The association noted that the operating hours align with an earlier mandate issued by the Central Bank of Nigeria (CBN) and the National Security Agency (NSA).

Source: Legit.ng