Speculators have gotten their fingers burnt severely in the sharp appreciation of the Naira against the Dollar at the parallel market as strong indications have emerged on the efforts of the Central Bank of Nigeria (CBN) to stabilise the country’s currency.
According to a high ranking official of the Apex Bank, the deployment of a number of measures by the bank may have turned the tide in the foreign exchange (FOREX) market and led to the severe punishment suffered by currency hoarders and speculators.
The CBN had last week held that foreign currency speculators were to be blamed for the spiraling inflation of the naira, which depreciated to an all-time low of almost N400 to the dollar.
Governor Godwin Emefiele of the Apex Bank had accused speculators who connived with bureau de change operators to undermine the efforts of the bank of propping up the naira and warned that such speculators would eventually be punished by the market.
Last week, it became apparent that the recent depreciation of the naira was not as a result of genuine demand but the insatiable urge of speculators, many of whom had got burnt in the sharp appreciation of the naira.
The value of the naira which started last week at N367 rose to N350 by Tuesday and N305 by Wednesday.
There had been a wide gap between the selling price and the buying price on Wednesday, as Money changers bought from customers at N270 per dollar but sold at average of N305 per dollar.
Speaking on the wide gap between the buying rate and selling, a bureau de change operator said: “People had bought when the rate was N370, and they are already making losses. But by combining dollars bought at N270, the average buying rate becomes N320. So at N305, they are still losing about N15 per dollar.”
Although it rose again to N350 to the dollar at the close of business activities on Thursday, the naira closed the week stronger at N315 to the dollar.
Counting their losses, a good number of the sellers who had suffered huge losses confessed that they had bought at the rate of N380, hoping to sell at N400 before the sudden turn in fortunes.
Meanwhile, a source within the apex bank said: “The aim of the CBN is to ensure that the divergence between the official and parallel rate does not exceed N3, so we are looking at a parallel market rate of N200 to the dollar because the downward trend in the pressure on the naira will be sustained. The CBN has the capacity to sustain the downward pressure and will deploy further currency management initiatives while capitalising on fiscal policies of the federal government to remain in support of non-devaluation of the naira. The current stand of the federal government on Nigeria’s legal tender is non-devaluation. It will be unwise for anybody to be hoarding dollars because we can assure you that the naira appreciation is going to trend upwards going forward.”
Currently, the naira as gained value against the dollar which sells at N305.