Currency Traders Decry As Naira Strengthens Against Dollar In Both Official And Parallel Markets

Currency Traders Decry As Naira Strengthens Against Dollar In Both Official And Parallel Markets

Currency traders voiced their concerns yesterday over increasing losses and declining demand for the dollar as the naira continued to gain strength in both the official and parallel markets…….READ ALSO Trans-Border Traders Shun Naira Amidst Depreciation, Opt For CFA Franc

This came as a result of a 12% decrease, equivalent to N152.23, in the exchange rate for bureaux de change (BDC) to N1,117.5 per dollar set by the Central Bank of Nigeria (CBN).

The losses experienced by currency traders were due to the apex bank’s announcement of a ban on the use of foreign-denominated collaterals for naira loans.

However, the naira witnessed an appreciable increase in value against the US dollar in both markets. In the official market (Nigeria Foreign Exchange Market, NAFEM), the naira rose by N20.44 to N1,230.61 per dollar, while in the parallel market, it appreciated by N45 to N1,200 per dollar.

This surge in the value of the naira follows the CBN’s recent announcement of selling an additional $10,000 to 1,588 BDCs at a rate of N1,101 per dollar for eligible invisible transactions. Additionally, the CBN instructed BDCs to sell to eligible end-users at a spread not exceeding 1.5%.

Currency dealers lamented significant losses due to the continuous appreciation of the naira against the US dollar since March. Many BDCs incurred losses on dollars purchased from the CBN, as they still held dollars bought at a higher rate when the CBN announced a reduction in the rate.

Customers have also suspended transactions, anticipating a further decrease in the exchange rate based on the CBN’s announcement. The appreciation of the naira against the dollar has led to a decline in demand for dollars, with those hoarding dollars now selling them to avoid losses.

Despite increased demand, there are enough dollars available to serve customers, alleviating the pressure caused by fears of further depreciation.

Currency traders foresee the naira appreciating further in the long run, with some predicting it could reach N1000 per dollar or even N900 per dollar.

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