The naira plunged further against the United States
dollar to a new record low of 480 on Thursday,
down from 472 it recorded on Wednesday.
The currency had continued its two-week free fall
on Monday, closing at 445 to the dollar after
tumbling to 439 on Friday.
On Tuesday, the currency closed at 452 to the
greenback. Also on Tuesday, the external reserves
hit an 11-year low of $24.61bn.
“Dollar is very scarce in the market right now
because many people don’t know how low it will
fall in the near term, so people are holding on to
their hard currencies in order to watch the
direction of the market,” one dealer said.
The President, Association of Bureau De Change
Operators, Aminu Gwadabe, told Reuters that forex
traders from neighbouring countries and some
importers had also been moving in recently,
mopping up dollars and putting pressure on the
naira in a possible speculative bid.
Chronic dollar shortage plunged the local currency
to a wave of depreciation, which economic and
financial analysts have linked to speculative attack
on the naira and increased demand from
companies and individuals.
After trading between 423 and 425 for several
weeks, the naira plunged to 428 last Wednesday.
This came a day after the Central Bank of Nigeria’s
Monetary Policy Committee retained the lending
rate at 14 per cent contrary to calls by the fiscal
authority, economists and stakeholders.
Analysts have dismissed that recent declines had
links to the MPC decision to retain the lending rate
at the current rate.
However, at the interbank market on Thursday, the
naira closed at 305.31 to the dollar, up from
312.99 on Wednesday.
Gwadabe said that the planned commencement of
distribution of forex by Travelex could not hold due
to some bottlenecks.
Travelex, an international money transfer
organisation, ought to have begun the distribution
forex to the BDC operators on Monday.
Its intervention was postponed to Wednesday, but
again, it could not hold.
The ABCON leader had said the sale of forex to the
BDC operators by Travelex would help to stem the
tide of volatility in the exchange rate and
subsequently close the huge gap between the
official and parallel market rates.
He could not tell when Travelex would commence
the sale of forex to the BDCs.
According to him, Travelex has the technology to
sell forex to about 1,000 BDCs in a couple of
hours, which is a major advantage.
He said the latest decline in the naira value was as
a result of the activities of speculators.
A currency analyst at Ecobank Nigeria, Mr. Kunle
Ezun, said, “The rising exchange rates we are
seeing at the parallel market now are not realistic.
They have to do with the activities of speculators.
“However, we cannot rule out the fact that there is
an acute and chronic shortage of FX; there is a
genuine demand that the supply cannot match
simply because inflows have dropped
Gwadabe said, “Several sharp practices have been
going on in the forex market and these elements
want to continue making profits from the status
quo. This is why they are speculating against the
“They are attacking the naira. This is why the fall
in the value of the naira is partly caused by the
activities of speculators.”