The Federal Government’s insistence not to devalue the naira yesterday saw the local currency firming sharply on the parallel market against the greenback. The naira closed at between N300 and N310 to dollar, regaining about 20 per cent of its Tuesday’s N364 to dollar closing rate.
The rates had opened at N295 to dollar, moved to N300 and closed at N310 to dollar in different parts of the country including Lagos, Abuja, Onitsha and Aba.
The ongoing rebound of the naira means the Central Bank of Nigeria’s (CBN) drive for exchange rate stability and zero tolerance for currency speculators is already yielding the desired result. The naira had firmed as retail traders, having anticipated a cut in the official rate and stocked up on dollars, bought the local currency back after the government said it would not devalue.
Findings showed that there was drama yesterday at the Abuja foreign currency market as the Naira kept fluctuating against the dollar. By 9am yesterday at the popular Wuse Zone 4 hub of Bureau De Change in Abuja the Naira started at around N294 to the dollar, appreciated to N247 in the afternoon and by 4:30pmwas trending around N200 to the dollar.
However, within a space of five at the Zone 4 Plaza currency market, The Nation first learnt that the Naira was N260 to the dollar at 5:52pm and four minutes later, it had depreciated to N295 to the dollar.
The unpredictability of the value of the Naira has kept Nigerians and Abuja residents in particular on edge and has remained a trending topic all over the city.
However, the official exchange rate has closed at N197.50 following CBN’s curbs introduced late last year to defend a currency peg have restricted access to dollars. The policy shift has moved demand for dollars on to the parallel market, a flow further fuelled by speculation of a possible weakening of the peg.
On Saturday, President Muhammadu Buhari rejected the idea of devaluing the naira, despite mounting pressure from an economic crisis caused by a sharp fall in the price of oil, Nigeria’s dominant export. The parallel market naira had risen on Monday and Tuesday, and its gains gathered pace yesterday.
“The market is reacting to the president’s ‘no devaluation’ stance,” Aminu Gwadabe, who is the President, Association of Bureau De Change Operators of Nigeria (ABCON) said. Authorities had stepped up efforts to rid the market of illegal currency traders, he added.
He said the many BDC operators are not sure the liquidity in the market will continue, urging government to enhance more liquidity in the market to bring the rates further down.
Gwadabe said the association was advising members to issue receipts to customers for foreign currency transactions in order to improve transparency and curb speculation. He explained that the group was working to introduce a single quote across the parallel market and maintain a bid-ask spread of 3.5 percent. The unofficial market still accounts for less than five per cent of Nigeria’s currency trades