Nigerian currency, the Naira weakened against the dollar on the parallel market yesterday as speculators took advantage of recent gains to mop up dollars, creating fresh scarcity.
It was quoted at 350 to the dollar yesterday, weaker than its 300 per dollar close the previous day, (Wednesday).
The fast dwindling value of the Naira took forex speculators by surprise, as its appreciation from N400 per dollar it sold last week at the parallel market created some confusion amongst speculators.
Industry analysts attributed a number of measures taken by the apex bank lately to have contributed to the improvement.
One is the decision to publish all forex sales from the inter-bank market to make for unprecedented transparency. The second is said to be the mop-up operations of the CBN which had reduced the excess liquidity behind the high speculation of the upper week. This step is said to have made the Naira ‘relatively scarce’.
There was also the decision by CBN to maintain supply forex for school fees and medicals which earlier speculated removal from interbank forex eligibility had caused panic.
Another reason, being adduced by market watchers, has to do with the rising cost and drop in demand for imported goods because a good number of Nigerians are beginning to switch consumption to local goods. This is also said to have led to a significant fall in dollar demand.
On Wednesday, the Naira at the parallel market exchanged for about N295, a further improvement on the N305 to the dollar on Tuesday, garnering over N100 gain on the panic by speculators struggling to cut
their losses. Some parallel market operators revealed that they bought from sellers at the rate of N272 and sold at N295. 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.
Two officials of CBN who pleaded not to be named, claimed that the deployment of a number measures by the bank may have turned the tide in the forex market and led to the severe punishment suffered by currency hoarders and speculators.
It will be recalled that the CBN had said that speculators were behind the market burble since the upper week which made a mince-meat of the Naira sending it crashing to an all-time low of N400 to the US dollar.
The CBN Governor, Godwin Emefiele, had accused speculators who connived with bureau de change operators to undermine the efforts of the Bank at propping up the Naira and warned that such speculators would eventually be punished by the market.