Naira holds N1,500/$ line amid EFCC clampdown
The naira held its ground on the unofficial market, appreciating against the dollar on the parallel market as the dollar index posted some losses amid profit-taking.
The value of the naira was N1,500 on Friday, compared to N1,510/$1 on Thursday on the black market.
The naira settled at N1,482.8 on Friday, up from N1,485.7 on Thursday in the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The Economic and Financial Crimes Commission (EFCC) has increased its efforts by adopting stronger new laws on Bureau de Change (BDC) and foreign exchange transactions on the black market to combat speculation against the weak naira.
EFCC agents recently arrested illegal currency traders in Abuja, Lagos, Kano, and Port Harcourt as part of their ongoing crackdown on street trading. The EFCC has already frozen more than 300 accounts connected to illegal foreign exchange trading.
The country’s financial watchdog, the Securities and Exchange Commission (SEC), also plans to work with the EFCC to mitigate forex trading manipulations within the digital space. According to CBN head of risk management, Blaise Ijebor, foreign exchange trading on the street is prohibited.
The CBN significantly increased the capital requirements for the nation’s BDCs, citing the need to regulate the sector and ensure that it isn’t undermining the value of the naira.
The apex bank increased the capital requirements for tier one BDCs operating nationwide from N35 million to N2 billion, while tier two BDCs operating in a single state saw an increase from N35 million to N500 million. The sector has six months to comply.
The umbrella group of the BDCs has requested a delay and a reduction in the new thresholds from the authorities.
This action follows the Federal Government’s announcement of plans to outlaw the trading of cryptocurrencies between individuals in naira as part of a larger crackdown on cryptocurrency platforms, which they claim is exacerbating the volatility of the local currency.
The naira has lost more than two-thirds of its value to the dollar since last year’s liberalisation of Nigeria’s FX market.
The haven currency declined against major currencies on Friday as investors booked profits following recent gains, but the US currency was still in a solid position to rise further due to encouraging U.S. economic data that caused markets to reduce their expectations for interest rate reductions.
Data released on Friday showed shipments and new orders for important capital goods made in the United States surged in April, surpassing expectations and pointing to a possible increase in business equipment spending in the first part of the second quarter.
This followed statistics released on Thursday revealing that U.S. manufacturers were reporting rising input prices and that U.S. business activity in May increased to the highest level in just over two years.
This week’s release of the minutes from the Federal Reserve’s most recent meeting revealed a heated discussion among decision-makers about whether the current interest rates were tight enough to curb inflation.
Following five straight trading sessions of gains, the dollar index saw a 0.3 percent decline on Friday, closing at 104 index points against a basket of major currencies. However, the dollar index increased by 0.2 percent for the entire week.
