Currency speculators gain N81.50 per dollar sold at black market

As a result of the spread between the black market and official market rates, currency speculators who may have obtained dollar from the official window despite all odds, have made at least a gain of N81.50.

This translates to a margin of 16.53 per cent as of the close of business on Thursday.

The differential, coupled with the high cost of remitting to Nigeria, has pushed many Nigerians in the Diaspora to unofficial means, leading to the recent Naira for Dollar reward scheme policy introduced by the Central Bank of Nigeria (CBN).

Despite gains recorded by the local currency, the gap between the official and parallel markets persists.

The Naira gained against the U.S. dollar at the parallel market segment on Thursday, data posted on abokiFX.com, a website that collates parallel market rates in Lagos showed.

According to the data published, the local unit closed at N493.00 at the black market, representing N9.00 or 1.80 per cent appreciation from N502.00, the rate it traded in the previous session on Wednesday.

 Naira gained against the U.S. dollar at the official Investors and Exporters (I&E) window and the Bureau De Change (BDC) and the black market on Thursday.

The currency closed at N411.50 per dollar, a 0.12 per cent appreciation from N412.00 it traded in the previous session on Wednesday.

It closed at N490 per dollar from N500/$ traded on Wednesday, thus reducing the margin to N1 from N2 which dealers in this segment could have made.

It should be remembered that the Association of Bureau De Change Operators of Nigeria (ABCON), has consistently called on the CBN to increase the sales margin of BDCs.

They said that the N2 margin presently allowed by the apex bank is inadequate in view of the operating cost of BDCs as well as the rising inflationary trend in the country.

Their directors recently held a meeting where they highlighted the need for the CBN to expand the operating scope of BDCs to allow for more business revenue to cover their operating cost.

The Naira exchange rate has been going up and down for a long while. But one group is sitting pretty in the midst of these fluctuations. They are currency speculators, who buy and sell currencies to profit from fluctuations in the value of those currencies.

Speculators have posted record earnings from such buying and selling, but instead of abating due to efforts of the monetary authorities, more profits are being made by this group.

Rightly or wrongly, authorities have blamed the Naira’s misfortune on currency speculators, rolling out policy measures to unify the exchange rate and run them out of business.

However,  checks reveal that the Naira witnessed a forex turnover of $138.20 million on Thursday, translating to a 4.81 per cent rise from $131.86 million posted in the previous session on Wednesday.

Dealers agreed that this was in line with the promise of increased dollar supply by the CBN to banks.

The domestic currency reached an intraday low of N412.00 and a high of N400.00 before closing at N411.50 on Thursday. The last time the currency touched N411.00 and above at the Nafex window was on June 15 when it closed at N411.75 per $1.

As the naira buckled under intense pressure amidst unstable oil prices mid-last year, the Governor of the Central Bank, Godwin Emefiele, promised that the CBN would continue to pursue foreign exchange (FX) rate unification around the Nigerian Autonomous Foreign Exchange (NAFEX) window.

NAFEX rate is the window where investors and exporters trade dollars on a market-determined basis.

The unification which the first step has been taken, will end a long history of round-tripping in the foreign exchange market and make the market more transparent.

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