News reaching VERY SERIAL indicates that the Nigerian naira in a twist of fate is currently trading at N900 to the United States Dollar on Friday, November 3rd, 2023 after the Nigeria’s government announced plans to digitalise FX (Forex) transactions and discourage speculative demands and hoarding of FX in cash.
Multiple Bureau De Change operators who spoke to VERY SERIAL Review on Friday afternoon confirmed that the United States greenback has crashed with respect to the Nigerian Naira, adding that the currency is currently trading at N900 to the dollar.
Analysts, BDC operators and currency traders attributed the naira sudden gain to a couple of government-announced monetary policies, which has put forex speculators into an uncertain and panic mode.
Nigeria’s government says it is planning to introduce new foreign exchange rules — including a crackdown on illegal currency trading — that it hopes will result in the naira closing its more-than-45% gap with the unofficial rate and reaching a “fair price” by year-end, a top official said.
The Central Bank of Nigeria (CBN) had also earlier said it planned to clear a backlog of dollar demand estimated at about $6.7 billion, bolster the naira forward market, and set transparent rules for the operations of the official market, Taiwo Oyedele, chair of the presidential committee on fiscal policy and tax reforms, said in an interview.
VERY SERIAL has earlier reported that the Nigeria Apex bank has cleared an average of 75% to 80% of unsettled matured FX forward contracts in banks.
As at last week Wednesday and Thursday, the naira tremendously weakened to a record low of N1,300 to a United States dollar over the scarcity of the greenback and continuous demand. However as at Friday one week ago, the naira strengthened to N1,250 per dollar and since then it has continued to gain value.
The pressure on the foreign exchange market eased on Tuesday and Wednesday as naira appreciated against the dollar at the official market.
On Tuesday October 31st 2023, the naira had appreciated by 10.0% in value against the US dollar in one week, further gaining N100/US dollar and exchanging at 1 USD to 1,150 NGN as against N1,250 it traded on Friday at the parallel market popularly called black market.
Multiple BDC operators that spoke with VERY SERIAL REVIEW today confirmed that the Nigerian naira is currently exchanging at N900 to the US dollar and expressed fears over the uncertainties of the naira to dollar rate. adding that they are not currently buying the greenback so as not to incur further loss.
An operator by the name Alhaji Adamu spoke to VERY SERIAL this morning, he said: “At the moment we are not buying dollars as we are not sure of the current price of the dollar to naira. Many of our colleagues who bought the dollars for as much as N1,200 have experienced huge losses.”
VERY SERIAL understands that the price drop of the naira to dollar to N900 has caused heavy losses for speculators and currency hoarders who believed that the dollar to naira rate will continue to increase up to N1,500 an average by December 2023.
We are currently buying the dollar between N850 to N900 as the price has dropped immensely in the market, Dorcas, a female BDC operator told VERY SERIAL this afternoon. Another operator by the name USsman confirmed the naira appreciation and told he is buying at N900. We asked how much would it be if he wants to sell dollars to us, he cut the phone and ended the call immediately.
A lady BDC operator at Ikeja also confirmed that they are buying the greenback at N900, asserting that it has dropped. However none of this operator is willing or ready to sell the dollar to us when we inquired as we understand many of them have speculated and bought at high prices and have lost so much within a short time.
Another Operator named Funto who sells forex in Lagos told VERY SERIAL that she is not trading at the moment as no one is certain about the current exchange rate of the dollar to the naira and every seller is afraid not to lose money as the naira value is currently appreciating. “I am not buying dollars for several days now as the price has remain unstable. If you buy, th e next day the price may fall and you will lose big,” Funto told our correspondent on Friday.
JPMorgan Chase & Co on Wednesday had also predicted that the Naira to US dollar exchange rate will continue to appreciate in the official market and eventually strengthen towards N850 by year-end as the combination of tighter policy, as well as more attractive rates and FX levels deter incremental dollarisation and perhaps attracts some foreign capital.
This is even as JPMorgan says it expects Nigerian government and regulatory authorities to maintain a willingness for greater flexibility of the exchange rate. Though it said that while a strengthened naira against US dollar exchange rate is crucial, “the large backlog of unmet FX demand and low net FX reserves makes the job challenging”.
“The Central Bank of Nigeria (CBN) appears willing to once again allow a flexible exchange rate without the use of moral suasion to limit the upside. This was initially the case during the first attempt at re-caliberating the FX market, however those efforts lost steam due to inflation concerns.
“We believe recent efforts to restore a flexible FX regime may be sustained given the willingness to accompany it with tighter monetary conditions. The interbank FX rate has risen in recent days to over N900, from N750, thereby significantly closing the gap to the parallel rate which is now just above N1,000,” JPMorgan Chase & Co noted in its November 1 note titled “Nigeria local markets strategy: Getting set for re-opening”.
