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Market reverses as dollar trades below N800

Naira recorded a major gain against other currencies at the parallel market, yesterday, with dollar dropping to as low as N780/$ in Lagos yesterday evening, coming as a breather for the troubled naira.

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Naira recorded a major gain against other currencies at the parallel market, yesterday, with dollar dropping to as low as N780/$ in Lagos yesterday evening, coming as a breather for the troubled naira.

Last week, naira dropped as low N880 per dollar across different street markets. The situation deteriorated to a breaking point last Thursday as some dealers were quoting N900 per dollar.
The market seemed to have lost direction on Monday with buying pressure dropping to a record low.

Some bureau de change (BDC) operators told The Guardian that they were waiting for a clear market lead to resume buying.

At NAHCO, Yaba and Ejigbo areas of Lagos as at yesterday’s morning, a few dealers were on bargain transactions amid general hesitation. But the greenback plunged to between N750 and N800 as at 6:00p.m.

While Aboki Forex, a market tracking app, quoted N798 as buying rate and N800 as selling offer, independent dealers told The Guardian they would not buy or sell above N750 for a dollar.

Findings, however, suggested the drop is triggered by lack of market direction and not necessarily a new price equilibrium.

Supply is still very low. For instance, a dealer disclosed that he has a $5 million request but “there is nowhere I can get the money because people are not selling.”

On why, then, the price suddenly lost its last week’s peg, a different source referenced arrest of some dealers by officials of the Economic and Financial Crimes Commission (EFCC).

“Some of the people arrested are the major dealers. Those are the people that give us price. If they don’t provide direction, nobody can predict the market. I believe we will know the new price after they have settled. The exchange rate may go up then or drop, nobody knows,” a trader stated.

The Guardian could not reach President of the Association of Bureau de Change of Nigeria (ABCON), Dr. Aminu Gwadabe, for comment yesterday on EFCC’s intervention and other issues.

Recall that there was increase in activities in the market last week with large cash released to mop up the black market. For the first time, the market arbitrage rose to 100 per cent, sending shockwave across the market.

Effective December 15, the Central Bank of Nigeria (CBN) is releasing redesigned N200, N500 and N1000 banknotes with the old ones expected to be phased out by January 31, 2023.

The plan is seen as a major move to mope up black money, which the apex bank has described as a major distortion with consequences for inflation, exchange rate and cash management.

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