Losers Identified as Dollar Crashes in All Markets, Over N10 Billion Lost
- The naira experienced a notable rebound in February, achieving one of its biggest rises in the past few months
- The local currency began February at N1,640/$ on the parallel market and completed the month at N1,495/$
- In the official market, the naira started the month of February at N1,620/$ and completed the month at N1,492/$
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
In February, the naira made a significant resurgence and achieved one of its largest gains in recent months.
Source: Getty Images
On the parallel market, the local currency started February at N1,640 to the US dollar and ended the month at N1,495 to the US dollar, a gain of N145.
The naira began the month of February at N1,620 and ended the month at N1,492 in the official market.
According to FX analyst Michael Nwadike, FX speculators lost more than N10 billion during the recent naira rise and would continue to lose as holders of the greenback dump it on the open market.
He claims that with the launch of the Electronic Foreign Exchange Matching System (EFEMS), which is supported by the Central Bank of Nigeria (CBN), the days of forex speculation and market distortions in the domestic foreign exchange market are over.
The FX policy's adoption had a variety of effects on all financial market segments that deal with foreign exchange, including a recovery in the value of the naira in all markets.
“A stabilising naira is good for everyone stabilising at both the official markets, but sad over capital loses. This is not the time to hoard dollar because naira is fast finding its feet,” Olakunle Amos, FX trader based in Mushin Lagos. According to Bureau De Change operators in Wuse Zone 4, Abuja, naira rally made it difficult for speculators to make new purchases.
Aminu Bakori, one of the dealers, expressed his surprise at the naira's ability to record such a gain in such a short amount of time.
He said that the naira is benefiting from the CBN's decision to prolong the $25,000 weekly sale to Bureaux De Change (BDCs) at the Nigeria Foreign Exchange Market (NFEM) by four months.
According to him, the purpose of selling dollars to BDCs at the official market rate was to help the operators satisfy the growing demand for foreign currency.
Bakori said:
“The CBN recently reminded the general public, especially travelers of the continued availability of personal travel allowance and business travel allowance from their banks to meet their personal and business travel requirements”.
According to other FX operators, the continuous application of FX Code has put an end to the period of forex speculation and market distortions in the domestic foreign currency market.
But retired CBN Director Prof. Jonathan Aremu has cautioned that it's too soon to celebrate.
Aremu is an ECOWAS Regional Expert on Trade and Investment in addition to being a professor of international economic relations at Covenant University.
Aremu demanded more output in order to maintain the Naira's gains.
He characterized the currency's consistent rise in value relative to the US dollar as a good thing.
“But it may not be time to celebrate yet because, within this period, we have also seen moments when the Naira depreciated,” he said.
Source: Getty Images
In order to preserve stability, he advised the CBN to concentrate on increasing economic productivity.
He asserts that the apex bank need to take into account variables that affect production and liquidity in addition to interest rates.
Importers to pay less as CBN adjusts customs exchange rate
Legit.ng reported that the Central Bank of Nigeria (CBN) has crashed the Customs foreign exchange rate for cargo clearance slightly above the official window.
CBN fixed the daily Customs exchange rate at N1,498 per dollar, down from N1,500 the previous day.
Data from the Customs trade portal reveals that the new exchange rate came amid the strengthening of the naira in the official and black market windows.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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