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.
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