- The naira has made a remarkable rise in the last three days, causing an upset for speculators
- The Nigerian currency saw some level of improvement across the official and unofficial market
- This ongoing strengthening of the naira has disadvantaged hoarders and speculators
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
Over the past three days, the naira has shown a consistent appreciation in the parallel market, maintaining stability in the official market as well.
This has posed challenges for foreign exchange speculators and hoarders, leading to significant losses due to the continuous strengthening of the naira against the United States dollar over the last few days.
Naira's recent performance on both official and parallel market
Throughout most of the week, the naira witnessed appreciation in both the parallel and official markets, as monitored by Legit.ng on Abokifx.
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For instance, on Monday, November 13, 2023, the parallel market, popularly called the black market, closed at N1,140, but it experienced an increase on Tuesday, November 14, closing at N1,135.
Subsequently, the parallel market maintained this level of consistency, closing at N1,135 on both Wednesday and Thursday and then appreciating to N1,120 on Friday.
Furthermore, the naira has demonstrated a positive trend against the US dollar within the Nigerian Autonomous Foreign Exchange Fixing (NAFEX), which serves as the official exchange rate platform for the country.
According to data from the FMDQ Securities Exchange, it reached a rate of N839.48/$ on Monday, followed by a similar appreciation on Wednesday, reaching N818.99/$.
The week concluded robustly, with the naira closing at a more robust rate of N791.75.
This ongoing strengthening of the naira in both markets has disadvantaged hoarders and speculators.
Earlier in the week, the Minister of Finance, Wale Edun, addressed the forex shortage in Nigeria, attributing it to the low export revenue.
Forex speculators doing more evil than good to the economy
Speaking on the activities of forex speculators, John Aloma, a financial expert, told Legit.ng that they are doing more evil than good to the country's economy.
When you buy dollars and store them in your house and cause an artificial scarcity, hoping for the rate to continue rising so that you can make an exceptional profit, you are doing a lot of evil to Nigeria's economy.
He, however, advises that the issue can be tackled by the government, ensuring sufficient liquidity in the market. The government has to ensure that more foreign exchange is supplied into the market to ease the pressure on the naira.
Liquidity will be achieved if the country improves its crude oil production and explores more sources of generating foreign exchange. Adequate infusion of foreign exchange into the market is poised to elevate the worth of the naira while concurrently depreciating the value of foreign exchange, notably the US dollar.
Experts Offer Simple Solutions to Naira Free Fall Against US Dollar
In related news, Legit.ng reported that finance experts have suggested remedies for the ongoing devaluation of the naira, observed in both the official and unofficial foreign exchange markets.
The official foreign exchange markets registered the naira's lowest level against the US dollar two weeks ago.
This decline occurred in the wake of the CBN repaying debts owed to foreign companies, a move that contributed to the recovery of the naira's diminished value.
These experts assert that the CBN and the federal government can take decisive steps to address and resolve the challenges associated with the naira exchange rate.