The Naira yesterday made a massive gain of N100, closing at N840/$ at the parallel market in Lagos.
It, however, closed lower at N850/$ in Abuja markets, representing a 9.57 per cent appreciation compared with Tuesday’s rate.
At the Investor and Exporter (I&E) window – the official market – the naira closed at N759 to the dollar, creating around N81 premium between the official and parallel markets. There was a $61 million turnover at the I&E window.
According to Bureau De Change operators in Wuse Zone 4, Abuja, the naira started the day at N940/$ and gradually increased to the current rate.
One of the traders, Ibrahim Bakori, told our reporter that he was surprised by the naira’s appreciation.
Asked what he thought was responsible, Bakori said it was “the result of the meeting between President Bola Tinubu and the Acting CBN Governor Folashodun Shonubi”.
Another Forex dealer, Nura, expressed shock at what he described as the “big fall” of the dollar at the parallel market.
Just like Bakori, Nura said the meeting between President Tinubu and Shonubi had sent signals of something significant about to happen in the Forex market.
Reacting to the news that the CBN might flood the market dollars in the coming days to check the fall of the Naira, a financial expert, Dr. Victor Adoji, cautioned against the planned release of dollars into the system by the CBN.
He said: “The money outside the Deposit Money Banks (DMBs), supposedly over N2 trillion, will swallow the ‘flood’ especially because of the rational appetite of Nigerians for holding dollar”.
He urged the CBN to “take a look at the outstanding demand portfolio for the dollar” before releasing more.
A Bureaux De Change (BDC) trader based in Marina, central Lagos, Garuba Sarki, said many forex dealers are not ready to buy dollars at present because of fears they might lose money.
“Many speculative dealers are taking the back seat.
“We expect the naira to continue to rebound until convergence between the official and parallel market rates occurs.
“Many traders are being cautious about losing funds in the coming days,” he said.
He said funding for BDCs or getting the banks to sell dollars to retail-end buyers will bring greater mileage to the naira.
President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, advised the Federal Government to enhance financial intelligence by tracking people with proceeds of corruption to sanitise the market.
He said many of the people with proceeds of corruption are the ones putting pressure on the forex market through their manipulative actions.
“The naira is depreciating not by forces of demand and supply, but by the collective action and impact of the people with illicit funds,” he said.
Former Executive Director of Keystone Bank Limited, Richard Obire, said Nigeria’s heavy and skewed outward-oriented consumption of goods and services as seen in decades of substantial bills for food and energy imports remains a hindrance to naira stability.
Another factor, he said, is the massive corruption-driven capital outflows which in turn severely damages Nigeria’s capacity to produce at scale.
On ways to strengthen the naira, he advised that in the short-term, there is a need to find non-market damaging ways to increase the supply of hard currencies and reduce the demand for same.
According to Obire, the right pricing for remittances and frictionless processes for their use by recipients should see the volumes growing again.
He said that insecurity hampering food production needs to be tackled with a sense of urgency and effectiveness.
“Priority should be given through deploying pragmatic incentive programmes to drive up the volume of food products for domestic consumption and industrial use to reduce our food import bill.
“All government consumption expenditures requiring the use of hard currencies should be suspended indefinitely, starting now,” he advised.
Obire said the turnaround maintenance (TAM) status of refineries in Port Harcourt and Warri should be appraised immediately.
“Effort should be focused on the one which can begin producing quicker. The other one should be made to be up and running, not long after. This should reduce the required forex for fuel imports.
“In the long term, only a strong economy will produce a stable currency. To achieve this will require addressing the fundamental structural defects in our political economy hampering an accelerated transition from an outward consumption-oriented economy into a mainly balanced production-driven one,” he said.
The CBN had in June unified the exchange rate and abolished multiple exchange rates.
The exercise led to a 40 per cent drop in the naira rate at the official market.
Dollar supply has remained a challenge, making it difficult for official and parallel market rates to converge.
