Currency speculators were on a losing streak as the Naira on strengthened against the dollar, gaining 22.13 percent (N290) against the dollar to steady at N980 as of Saturday from the peak of N1,310 on Thursday last week on the black market.
Speculators are now offloading the dollars they have been hoarding, following news about government plans to increase liquidity in the market.
Wale Edun, the finance minister said in October 23, 2023 that Nigeria is expecting as much as $10 billion in new foreign currency inflows in the next few weeks to ease acute dollar shortages in the foreign exchange market.
The CBN has started clearing the foreign exchange (FX) backlog and delivered on over 75 percent to 80 percent of outstanding matured FX forwards in some specific banks,
The pressure on the foreign exchange market eased on Tuesday and Wednesday as naira appreciated against the dollar at the official market.
After trading on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), naira strengthened further by 3.59 percent and 17.96 percent on Tuesday.
On Thursday naira depreciated against the dollar, losing 0.92 percent as the dollar was quoted N793.28 as against N786.02 on Wednesday.
Aminu Gwadabe, The President of ABCON the Association of Bureau de Change Operators of Nigeria has warned those speculating against the naira to be wary.
The President of ABCON, Aminu Gwadabe, gave the warning in a WhatsApp message sent to The PUNCH on Friday.
He noted that the Central Bank of Nigeria was set to inflict pain on currency speculators.
“What is happening in the market and the continuous naira rebounds are the manifestations of the CBN double-edged sword measures of dollar liquidity injection and naira mopping through the instrumentality of interest rates hikes.
“It is a good development as it is a greatest risk to speculate, hoard and substitute naira for other currencies,” Gwadabe declared according to Punch reports.
Business Day reports that Street traders were already buying dollars at the rate of N980 on Friday as against N1,130 on Thursday. Speculators who have been hoarding dollars for arbitrage are now offloading the same to avoid losing money.
Before now, people were buying dollars for future needs like school fees ahead of January when foreign schools resume but with the government’s efforts to increase dollar supply, demand has reduced on the expectation that the rate will drop soon.
Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise, attributed the naira resurgence to inflows from oil swap agreements and loans.
“The government has told us the steps they are taking to improve liquidity. They talked about NNPC, swap or forward sales, which were to bring about $3 billion, recently they talked about $10 billion expected into the economy,” Yusuf said.
“So, it is possible that some of those things have started to trickle in and just as they said, their priority is clearing off the backlog in order to begin to restore confidence in the system. I think that is what is happening,” Yusuf added.