Market News

Naira: Concerns over fresh threat from Crypto traders - THE NATION

APRIL 22, 2024

  • Speculators count losses as naira rises against dollar
  • Naira will continue to appreciate against dollar – Shettima

The Naira appears to be up against a fresh threat from two crypto exchange platforms, just six weeks after the clamp down on Binance operations in Nigeria. The national currency had slumped badly in the forex market in the weeks preceding the clamp down on Binance, exchanging for as much as N1,950 in mid-February.

But soon afterwards, the Naira started to recover and was at a time N1,200 until the middle of last week when it lost some grounds to the dollar again.

Observers blamed its earlier misfortune on alleged manipulation of the market by Binance and are citing the new crypto exchange platforms BYBIT and BITGET as the cause of the latest slip.

But Vice President Kashim  Shettima declared yesterday in Abuja that the Naira would continue its upward mobility against the dollar.

An investigation by The Nation also showed that many speculators who had invested in the dollar in the hope that the naira would go further down are now counting their losses. 

On Monday last week, the Naira was N1,100 to a dollar at the black market. It depreciated to N1,148 by Tuesday and N1,169 on Friday. Observers believe this is on account of the operations of the peer to peer platforms and say government must step in to stop the naira slide.

Following the recent recovery of the naira, the global investment banking, securities and investment management firm Goldman Sachs Group, Inc. rated it one of the best performing currencies around the globe.

The firm had initially predicted a naira to dollar exchange rate of 1,200 by year-end 2024 but later said the Nigerian currency could exchange for 1000 to a dollar or even below provided the authorities are able to maintain the tempo of their economic reforms.

 This bullish forecast, it said, followed capital inflows and interest rate adjustments, aiding the naira recovery from substantial losses incurred due to two devaluations since June, following the government’s relaxation of currency controls.

Naira’ll continue to appreciate against dollar, Shettima tells LCCI team

But Vice President Shettima is optimistic that the naira is on course to regain its status as a currency to reckon with.

“The naira went haywire and some people were celebrating. But inwardly, we were laughing at them because we knew that we have the leadership to reverse the trend,” the VP’s spokesman, Stanley Nkwocha, quoted him as telling his visitors.

He added: “Asiwaju knows the game, and truly the naira is gaining and the difference will drop further.”

Shettima said government’s decision to end fuel subsidy and unify the multiple exchange rate was necessary to address the challenges facing the country.

On efforts to boost the power sector and generate jobs for youths, he said: “We are determined to ensure that we generate jobs for our youths.

“Honestly, the President’s obsession is to live in a place of glory, to transform this country to a higher pedestal.

“He wants to leave a legacy, one of qualitative leadership, because the hope of the black man, the hope of Africa rests with Nigeria.

“I want to assure you that President Bola Ahmed Tinubu is one of you. He understands your ecosystem. In this government, you have an ally and a friend,” VP Shettima further noted.

The LCCI delegation presented recommendations to the VP, including the need for more innovations to address insecurity and promote credit access, stimulate investment and support entrepreneurship.

“This could include targeted interventions such as concessional lending facilities, loan guarantees and interest rate subsidies tailored to the needs of SMEs and key sectors of the economy like agriculture, manufacturing and power technology,” he added.

Other members of the LCCI on the delegation included Chief John Odeyemi, Chief Dr. Nike Akande, Asiwaju (Dr.) M. Olawale-Cole, Prince Funayo Okeowo, Gwueke Ajaifa, Sir Ladi Smith, Abimbola Ola, Olufemi Bakare, Ayotunde Coker, Tolulope Adeleke, Stephen Alangbo, Dr Chinyere Almona and Mrs Temitope Akintunde.

In a separate meeting, VP Shettima urged Nigerians to live peacefully among themselves and learn to accommodate each other.

He made this appeal when a delegation from the Association of National Accountants of Nigeria (ANAN) led by its President, Dr. James Neminebor, paid him a visit at the Presidential Villa, Abuja.

He emphasised the need for tolerance and togetherness, citing the example of Jos, which he described as a hospitable city with a diverse population.

He also asked the association to channel its request for land in Abuja through the Deputy Chief of Staff to the President, Office of the Vice President, to enable him to follow it up with the relevant authorities.

He said: “No matter how long the night is, it must give way to the light of the dawn. The crisis we have in Jos will soon be over.

“Jos is the most hospitable city in this country in terms of weather. If we can harness the potentials of Jos and the Plateau as a whole, I believe that we can transform this nation into a better place.

“In one way or the other, we should learn how to accommodate each other; we should learn how to embrace one another. My SSA Media, Stanley Nkwocha, is a Jos boy.

“Jos is ideal; Jos is not an ethnic identity. Some of the Hausas, the Fulanis, the Kanuris and the other ethnic groups living in Jos were born and bred in Jos. They don’t have any other place to call home.

“The beauty of the Jos experience is that we have the generality of Nigerians called Northern Igbos. He (Nkwocha) is Igbo; Owelle Rochas Anayo Okorocha is a Northern Igbo. This gentleman (Nkwocha) speaks Hausa more than I do. We also have Sir Emeka Offor and so many of them.

“I believe that we should learn to imbibe in Nigeria that culture of tolerance, of togetherness, because I will rather be a small fish in a big pawn than to be a big fish in a small pawn.

“We are a kaleidoscope of colours. The sooner we realise it, the better,” he said.

Earlier, ANAN President, Dr. Neminebor, told the VP that there was need to introduce a new value orientation where the issue of discipline will become a culture for Nigerians, even as the association recommended the setting up of Anti-corruption Recovery Investment and Management Commission to prevent the re-looting of recovered assets in the country.

Currency speculators count losses as naira rises against dollar

It was gathered that many speculators have lost money following the recent resurgence of the naira.

Such speculators had invested massively in the dollar in the hope that naira would depreciate further.

An investigation by our correspondent revealed that many of the currency hoarders who had envisaged that the value of the naira would depreciate further as low as N2,000 or more to $1 as anticipated in mid-February, have all being proven wrong as the nation’s legal tender has witnessed a rebound.

Some black market operators reportedly lured some of their patrons to dollarise their cash as the naira, in their calculation, would depreciate further.

However, the naira recorded a rebound even beyond the expectations of many, such that the gains of the naira have been the loss of many currency speculators who borrowed money to dollarise their assets. 

Confirming this development, one of the BDC operators in Mushin, Lagos, who simply gave his name as Adamu, said: “Some BDC operators lured individuals to buy dollars when it was between N1700-N1800 to the dollar. But now that the naira has recorded a rebound, most of them are counting their losses, no doubt.

“It’s very painful that they had to stake a lot of their hard earned money to do currency speculation.”

Chukwudi Iwuchukwu, a financial lawyer, noted that some individuals who bought N10 million worth of dollars at the black market on February 24 suffered huge losses as the current value of their liquid asset is worth only half the sum.

“If you bought N10 million worth of dollars at the black market on February 24, it’s currently worth about N5 million,” he said.

Writing on his former X handle, A. Ayofe @abdullahayofel last Tuesday recounted the experience of one of the currency speculators who is now in debt as a result of his wrong investment decision.

“Someone I know borrowed N18 million from a money lender to buy $10,000 at N1,800 to $1 in February to pay back N19 million in May (three months) when the dollar gets to say N2,000 or more.

“Today, that N18 million is worth N11 million at N1,100 to $1. He is now looking for where to get extra N8 million to clear his debt as the three months is fast approaching.

“He used his bungalow as collateral. The problem now is that before May, the money could further reduce to N9 million at N900 to $1, making it impossible to retrieve his house.”

Dr. Aminu Gwadabe, the National President of Association of Bureaux de Change Operators of Nigeria (ABCON), said the otherwise awkward situation of the naira in the last few months has given way to optimism.

He said: “It is really exciting and interesting as we witnessed profound and significant naira rebounds faster than expected.

“It is a triumph of reality over behaviours that have no economic fundamentals.”

Gwadabe said all those who lost their investable funds during this period have to accept their fate.

“As regards the complaints of people borrowing money to speculate and make a margin, my take is that for any economic activity, there is reward and there is loss.

“So it is a gamble where you either win or lose. They should move on and next time be careful in jumping into what they cannot control.”

On the way forward, the ABCON boss appealed to the CBN and the fiscal authorities to proactively continue to induce confidence in the economy, strengthen stakeholders engagement, quick and fast responses including service delivery.

“Other hanging fruits include harnessing proceeds of diaspora remittances to inject liquidity through the BDCS. There should also be concerted efforts from all agencies of government to de-risk non-oil exports products to have a paradigm shift in our sources of foreign exchange to boost our external buffers.”

He added: “The excellent job of the security agencies in tackling corruption and money laundering should remain the cornerstone of this government. Above all, we must all as Nigerians have a change of mindset.”


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