In the dynamic world of foreign exchange, the Nigerian Naira embarked on a fluctuating journey against the US Dollar on November 6, 2023. Closing at N809.02/$1 in the official market, the Naira experienced a 4.06% increase compared to the previous Friday’s rate of N776.14/$1.
The day’s trading witnessed remarkable highs and lows, with an intraday peak at N1100/$1 and a low of N720.50/$1, creating a noteworthy spread of N379.50/$1. The forex turnover at the close of trading, sourced from the official NAFEM window, totaled $87.65 million, reflecting an 11.30% decrease from the day before.
Diverging from the official market, the black market told a different tale. The exchange rate appreciated by 16.18%, quoting at N1020/$1. Peer-to-peer traders took it a step further, quoting at N1063.50/$1.
The Central Bank’s Defensive Maneuvers
In response to these fluctuations, the Association of Bureau de Change Operators of Nigeria (ABCON) sounded a cautionary note to speculators. Aminu Gwadabe, ABCON’s President, underscored the Central Bank of Nigeria’s (CBN) commitment to counteracting speculative activities through its double-edged sword measures.
The CBN’s strategy involves dollar liquidity injection and naira mopping through interest rate hikes. Gwadabe warned against speculative endeavors, hoarding, and substituting the naira for other currencies, categorizing these as high-risk activities.
A Reversed Trend and Cautious Optimism
The recent positive trend in the naira’s value is attributed to the CBN’s initiatives in clearing the forex demand backlog in banks. This positive shift has prompted a change from panic buying to panic selling in the market.
ABCON acknowledged the turnaround in the naira’s depreciation and urged caution in attacking the currency. Gwadabe emphasized the pivotal role of Bureau de Change Operators (BDCs) in meeting the needs of the critical retail sector and contributing to the overall market stability.
A Plea for Inclusion and Collaboration
ABCON’s call extended to the CBN to provide clarifications and implement recommendations that include BDCs in the foreign exchange market. Gwadabe emphasized the importance of involving BDCs in the CBN’s transaction monitoring mechanism, ensuring effective utilization, and moderating potential disparities in the market.
As the Naira and Dollar continue their intricate dance on the forex stage, market participants remain on the lookout for further developments. The CBN’s arsenal and strategic maneuvers, coupled with cautious optimism, suggest a nuanced and dynamic landscape in the ongoing saga of currency fluctuations. Stay tuned for updates as the forex narrative unfolds.
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