Upon CBN warning, Naira increases at parallel market, trades at 910/$
By Sodiq Adelakun
Following a warning by the Central Bank of Nigeria to those involved in speculation in the foreign exchange market including the parallel market, the Naira on Wednesday gained against dollar as demand in the parallel segment of the foreign exchange (FX) market drops further.
FX dealers were as at 3pm still buying the green back at N880 while selling at N910, according to data by AbokiFX, an online platform that tracks the exchange rate on the parallel market.
This new level of shows a remarkable gain when compared to the preceding day when dealers bought it at N932 and sold at N942.
The pressure on the naira in the parallel segment of the foreign exchange market has been cooling since this week following the Central Bank of Nigeria (CBN) announcement of plans to boost dollar supply in coming weeks.
“The CBN’s pronouncements may provide a boost for the Naira in the short term but what is more important are those necessary reforms in governance and transparency that will shore up investors interest enough to sustain long term confidence in the Naira,” said Country Leader for Stransact, Eben Joels RSM correspondent firm for Nigeria.
Acting CBN Governor, Folashodun Shonubi had said that the government was ready to take action to save the naira, insisting that the record naira freefall was not caused by the market forces, rather by speculators.
“Mr President is very concerned about some of the goings on in the foreign exchange market. One of the things we discussed is what could be done to stabilise and what could be done to improve the liquidity in the market and also the goings on in the various other markets, including the parallel market.
“He’s concerned about its impact on the average person, since, unfortunately, a lot of activities that we do, which are purely local, are still referenced to exchange rates in the parallel market.
“We have discussed and I have shared with him what we are doing to improve supply. If you look at the official market, you will find that that market has been fairly stable and the spreads of the difference have not fluctuated as much.
“We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply, but are topped by speculative demand from people.
“Some of the plans and strategies, which I’m not at liberty to share with you, means sooner rather than later, the speculators should be careful because we believe the things we’re doing, when they come to fruition, may result in significant losses to them.
“But my presence here is more about the concerns the President has and his needs to know that we are doing something about it, assurances of which I have given him totally,”he said.
