Anxiety among traders and investors has increased due to the Naira’s poor conversion rate to the Dollar in the black market window of Nigeria’s foreign exchange (forex) market.
Holding the Naira is dangerous, particularly for portfolio investors. Therefore it has almost become routine for investors for the Nigerian currency to depreciate against the US dollar.
The market is getting excessively volatile, and FX dealers on the street are very wary that things might change quickly. We approach each day as though it were our last.
On Tuesday’s black market, the Naira was exchanged for one Dollar at N765 instead of N760 on Monday, representing a loss of N5 or 0.66 percent in less than 24 hours.
One of the FX dealers in Lagos, Alhaji Isa, told Business Post this afternoon, “We don’t even comprehend what is happening right now.”
“I hope you will remember. If caution were not exercised, the Naira would touch N750 to the Dollar this month, as I warned you last month. Has this not happened? Isa Alhaji enquired.
“As you can see, the banks and the CBN (Central Bank of Nigeria) complicate things. They must start selling dollars to us again; we are aware of the market and can relieve pressure on the Naira.
Aminu Gwadabe, the head of the Association of Bureaux de Change Operators of Nigeria (ABCON), accused the central bank of the persistent decline in the market value of the local currency relative to the US dollar in June 2022.
In an interview with The Punch, he said that the central bank’s regulatory practices impacted the value of the Naira in the FX market.
Numerous restrictive regulatory regimes exist. Currently, a local firm must have N2 billion in the capital to claim an operating license as an international money transfer operator in Nigeria.
“A foreign business enters and purchases a $1 million license. What is the value of $1 million in terms of N2 billion or N600 million?
“This is for a foreign corporation seeking an IMTO license, but a citizen must fork up N2 billion.” Therefore, it does not support smaller players, “he stated.
