Forex crisis: Traders lose as naira rebounds to 720/dollar

The naira has strengthened by 20.8% to 720 per dollar in the parallel market, according to research conducted by The PUNCH.Information Guide Nigeria

Following the Federal Government’s statement that the naira will be redesigned, the local currency experienced considerable pressure on the black market two weeks prior to this event.

Last weekend, the naira’s value versus the U.S. dollar reached an all-time low of 910 naira per dollar, following a steady decline throughout the previous week.

After a week-long crackdown on foreign exchange dealers in Abuja, Lagos, Kano, and other major cities by the Economic and Financial Crimes Commission, the currency began to recover against the U.S. dollar on Monday.

Officials from the Economic and Financial Crimes Commission (EFCC) arrested more than 90 Bureau De Change operators in the country’s major cities on suspicion of cash hoarding and helping politically vulnerable Nigerians and other criminal groups in money laundering.

Prior to the Federal Government’s decision to restructure the local currency, the naira was traded between 735 and 745 per dollar on the streets of Lagos and Abuja around two weeks before.

However, the naira rallied on Monday and was traded between 850 and 860 per dollar. On Tuesday and Wednesday, the value of the national currency increased dramatically and steadily, reaching 720 per dollar by Thursday’s end.

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Financial analysts and FX dealers who spoke with our reporters attributed the development to market mood and EFCC personnel activity.

Several BDCs reportedly went into hiding as a result of the crackdown on foreign exchange dealers, a move that prompted many politically vulnerable individuals and currency speculators to reduce their dollar demand.

In Lagos, Abuja, and other locations, there was a significant demand for the dollar on the parallel market.

Mustafa Abdullahi, a BDC operator at the Murtala Muhammed Airport in Lagos, disclosed to our correspondents on Thursday that he purchased the local currency for 715 dollars per unit and sold it for 720 dollars per unit.

As a result of the EFCC’s crackdown, he stated, a number of BDCs had gone into hiding, and the dollar’s demand had declined dramatically.

“Many of our people have lost hundreds of millions of naira due to the fall. Many of them bought the dollar when it was over N800. Now the US  currency has started falling and they are losing several millions. I personally lost millions of naira.”

Seriki Muhammed, an additional BDC operator at the Lagos airport, reported that he purchased the greenback for 717 per dollar and sold it for 721 per dollar on Tuesday.

Muhammed told our correspondent that several BDCs were licking their wounds because they had purchased over $500,000 at approximately 820 naira per dollar in expectation.

“We are in a big trouble unless the dollar rises again. Many of our people bought so many dollars, hoping it would gain further,” he told one of our correspondents.

A currency trader in Allen Avenue, Ikeja, Lagos, named only as Gambo Bello stated that he was buying and selling U.S. dollars for N715 and N720.

Abubakar Hamid, an Abuja-based BDC operator, revealed to one of our journalists that he purchased the U.S. dollar for N716 and sold it for N719.

Also, a BDC operator in Lagos Island, Zakari Mohammed, informed our correspondent that he was buying and selling at N718/dollar and N722/dollar.

Aminu Gwadabe, president of the Association of BDC Operators of Nigeria, stated that market mood and news of the redesigned naira pushed the market during the past two weeks.

According to him, the resurgence of the naira had caused several currency speculators to lose millions of naira. According to him, many currency traders were unaware that the naira would recover too quickly.JAMB Result

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