…Local currency trades at N820/$ in Lagos, Abuja
Naira inched close to a 15 per cent gain against dollar in the parallel market within a week, trading around N820/$ in Lagos and Abuja yesterday evening.
Reliable sources informed The Guardian that traders at major
market clusters were hurriedly dumping dollars yesterday as fear of a further
slide in the value of the greenback gripped the market.
A trader, who confided that he was desperate and looking for
an opportunity to offload his hoardings said the naira could appreciate to
around N700/$ this weekend. It sustained the rising momentum seen since the
beginning of the week.
Another dealer, who revealed that he was still hoarding a
substantial part of what he bought at an average of N920/$ last week, noted:
“as we speak, there is no fixed rate. People sell at the slightest opportunity
as they are not sure what the rate would be tomorrow. And the speed at which
the hard currencies are falling against naira is too high. This is the cause of
panic, and it is real.”
But even amid panic selling, The Guardian understands that
trading volume is still very low, underpinning the level of illiquidity.
Hence, many observers have dismissed the uptrend of the
value of the local currency as emotion-driven as opposed to strong market
fundamentals.
The Guardian had reported that about 48 hours after
President Bola Tinubu and Acting Governor of the Central Bank of Nigeria (CBN),
Folashodun Shonubi, held a crucial meeting on the state of the foreign exchange
(FX) market, there appeared to be a breather for the troubled currency as it
recorded a moderate gain, trading at about N880/$ at the black-market mid-week.
Dollar had spiked last week hitting an all-time high of
N950/$ at peer-to-peer (P2P) and parallel market amid fresh concern over
scarcity.
If the current momentum is sustained, official and
unofficial markets could achieve parity, converging around the same value, in
the coming days. At the current rates, the arbitrage has narrowed to below
N100/$.
Last week, the premium on the black market hit N200 per
dollar for the first time since the June market liberalisation that was aimed
at harmonising the multiple exchange rates.
At the height of the crisis last year, the premium rose to
100 per cent, the highest ever recorded since the country’s return to democracy
in 1999. During the military era, the margin widened to over 100 per cent,
triggering wholesale widespread manipulation, with banking licences procured
for foreign exchange deals.
In the popular Zone 4, Abuja, yesterday, there was
lamentation, as dealers groaned over losses of over N100 per dollar in some
cases.
Adamu Alhassan, who is a bureau du change operator, said: “I
am not happy about what has been happening since morning because most of us
have lost some money. The rate was N950 just last week. But now, we are buying
at N820 and selling at N850. We are not sure what to expect next.”
When reminded that the bureau de change operators enjoyed
the boom while it lasted, he said: “Of course, what do you expect?”
Samuel Itodo, who came to buy dollars, was ecstatic about
the gain recorded by naira in a few days and hoped it continued.
“I am very happy with what is happening with the dollar. Who
will believe that the rate can crash to the level within days? I was
apprehensive about the effect the falling exchange rate will have on the costs
of living.
“As an import-dependent country, any rise in the dollar will
automatically mean higher prices and higher cost of living. But can this be
sustained on a longer term?” he said.