Speculators who had projected that the naira would hit N2,000 to the dollar by the end of the first quarter of this year are counting their losses with the value of the naira gaining positive momentum after moves by the Central Bank of Nigeria (CBN) to solve the liquidity crisis in the foreign exchange market.
The naira, which was N1,120 to the dollar as of December 31, 2023, went down to N1,400 in January and further depreciated at the black market to N1,850 in February.
Many speculators had expected the value of the naira to continue its free fall as some analysts had postulated.
Some of them, envisaging that the value of the naira would further depreciate, had taken position at N1,900 and some had even bought the dollar at N1,700. However, as the CBN began fulfilling its promise of clearing the legacy backlog and supplying liquidity at the Nigeria Autonomous Foreign Exchange Market (NAFEM) as well as to the bureau de change operators, the value of the naira gained strength.
Accordingly, the Naira, which had fallen to a low of N1,900 this year, closed at the official market on Wednesday at N1,300, while at the parallel market, street traders were selling at N1,200 to the dollar on Thursday.
Jubril, a street trader at the Alade market in Lagos told LEADERSHIP Friday that whilst he was not buying dollars at the moment, the buying rate for the greenback was N1,100 whilst the selling rate was N1,200 to the dollar.
Noting that the appreciating value of the Naira was due to the recent moves by the CBN to ensure a stronger Naira, Jubril said: “Anybody that has dollars in the house now is at risk because we don’t know how far the CBN is willing to go. For me, I am not buying dollars today because anything can happen tomorrow. The price is changing, not even by N20 but by N100 or more every day, and to keep dollars in the hand now means that one will lose money.”
According to him, there is a possibility that the naira would go as high as N900/$1 and those that had been speculating and hoarding dollars would be at a loss, particularly those that had bought when it was as low as N1,600 early this month.
The CBN had earlier this week sold $10,000 to each BDC at a rate of N1,251 to the dollar to boost liquidity supply in the market, directing that each BDC to sell the dollars to eligible customers at a rate not exceeding 1.5 per cent above the purchase price, implying that each BDC is not expected to sell above N1,269 to the dollar.
Last week, the CBN announced that it had cleared the valid legacy backlog.
In a statement last week, the apex bank’s acting director, Corporate Communications, Mrs Hakama Sidi Ali, confirmed that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured.
She said that the CBN recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the forex backlog. This, alongside a supply of foreign exchange at the Nigeria Autonomous Foreign Exchange Market (NAFEM), had boosted liquidity.