The Naira rose by 20 per cent on Wednesday against the dollar at the parallel market to 290 from 375, which it traded on Monday.
24/02/16 280 / 290*** eve 400 / 405*** eve 342 / 350*** eve – Source AbokiFX
The naira had been on a free fall in the last two weeks, peaking at 391 against the greenback at the parallel market last week Thursday. The local currency, however, began a gradual recovery on Friday.
The parallel market naira had risen on Monday and Tuesday, and its gains gathered pace on Wednesday.
Foreign exchange dealers told Elombah.com that the naira’s recovery could be linked to the gradual inflows of foreign exchange into the forex market., but forex analysts say the speculators, who have contributed to increased demand for forex, have panicked based on President Buhari’s announcement and other global market news.
“Not sure how long to hold on for or even if it’s worth holding on to the accumulated forex, have panicked and started off loading their funds as fast as possible especially before the CBN intervention fund hits the market this Thursday causing additional supply.”
“There have been inflows into the market in recent days; the central bank and oil companies have been selling dollars,” a forex dealer at Apapa in Lagos, Alhaji Saliu Mustapha, said.
Forex dealers said the local currency was set to gain further momentum in coming days, arguing that most traders were rushing to reduce the amount of dollars in their holdings.
Other sources say Naira firmed sharply on the parallel market on Wednesday as retail traders, having anticipated a cut in its official rate and stocked up on dollars, bought the local currency back after the government said it would not devalue.
The market is reacting to the president’s ‘no devaluation’ stance,” said Aminu Gwadabe, the head of the association of Nigeria’s bureaux de change operators. Authorities had stepped up efforts to rid the market of illegal currency traders”.
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe said: “We have instructed our members to buy within the regulated exchange rate in the economy.”
ABCON on Tuesday had dissociated itself from the recent depreciation of the naira from N265 per dollar to N400, saying the depreciation was not caused by BDCs.
To address the situation and enhance transparency in the market, the Association said it would introduce a weekly exchange rate band to guide BDCs and members of the public.
Speaking at the press conference, Gwadabe said, “On the part of ABCON, as a way of enhancing transparency in the BDC subsector, we have decided to introduce weekly foreign exchange rate band.
This will serve as a guide to all BDCs and members of the public on the prevailing exchange rate across the country. The Rate Band will be operated in line with the regulated foreign exchange rate in the economy.
This is to forestall exploitation of foreign exchange end users, and also to ensure that end users are informed enough to avoid falling victims of exploitation. The Rate band will be announced via weekly press release that would be circulated to the media for publication.”
The economy of Nigeria has been battered by the plunge in global oil prices. The nation depends on crude oil for over 90 per cent of its forex earnings. The fall in the fortunes of the naira at the parallel market has affected companies and industries, causing economy growth to drop from 6.8 per cent to an average of 3.4 per cent.
The CBN has been rationing dollars as part of the measures to preserve the external reserves, which has hit an 11-year low of $28bn.
Meanwhile, the CBN-licensed Bureau De Change operators on Tuesday said plans were ongoing to transform their operational structure to compete in the global regulatory currency market.
The Acting President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, who stated this at a news conference in Lagos, said the move would help the local currency retailers to increase dollar liquidity in the nation’s forex market.
He said, “ABCON will introduce a series of measures aimed at transforming the operations of the BDCs in Nigeria to align with global best practices.
“We will seek the approval of relevant monetary and fiscal authorities as well as partnerships for effective usage of the nation’s external reserves to enhance domestic trade and foreign exchange management.”
The announcement came barely six weeks after the CBN had stopped dollar sale to the BDC operators as part of the measures to preserve the nation’s fast-depleting external reserves.
The Nigerian economy has received a beating from the fall in global crude oil prices, with the naira tumbling against the dollar at the parallel market.
Gwadabe said ABCON would introduce live and real-time online currency trading platforms in the Nigerian forex market, as part of the plans to gain access to the global regulatory currency market.
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