Market News

Naira gains at NAFEM as EFCC tightens noose on illegal FX traders - THE SUN

MAY 27, 2024

Naira sustained its ascent over the weekend, appreciating by 1 per cent to close at N1,482.81/$1 at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

Citing the need to regulate the banking industry, the CBN explained that the decision was to ensure the value of the naira was not undermined.

To double efforts in combating speculation against the naira, the EFCC recently arrested illegal currency traders in Abuja, Lagos, Kano and Port Harcourt. According to the EFCC, more than 300 bank accounts connected to illegal foreign exchange trading have been frozen.

Amid this, the country’s FX reserves saw modest increase of $73.05 million week-on-week (w/w), reaching a total of $32.74 billion. Similarly, the naira appreciated by 1.0 per cent to N1,482.81/$1 at NAFEM while it stood at N1,500/$1 at the parallel market.

However, the total turnover at the market declined by 39.4 per cent week-to-date (WTD) to $851.83 million, with trades consummated within the N1,400.00/$1 – N1,549.00/$1 band.

In the forwards market, the naira rates recorded on the 1-month (+1.1 per cent to N1,504.10/$1), 3-month (+1.4 per cent to N1,546.65/$1) and 6-month (+0.6 per cent to N1,621.89/$1) contracts increased. Elsewhere, the rate on the 1-year (-0.1 per cent to N1,769.62/$1) contract declined.

Analysts at Cordros Capital noted that FX liquidity declined this week due to CBN’s lack of intervention in the FX market following weak FX reserves and moderate inflows from FPIs, leading to volatility of the currency in the FX market.

In response to the development, the President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe stated that this was against international best practices.

Speaking at a panel session at an economic discourse organized by Vanguard Newspapers, Gwadabe criticized the negative label given to BDCs as financiers of terrorism and the illicit channel flow of money.

He noted that the current weak state of the naira was caused by the unearned income pursuing the naira and not due to demand for the dollar, adding that corruption was responsible for the depreciation of the naira.

Whilst stating that some of the policies of the CBN aimed at tackling street trading were not feasible, Gwadabe said exchange rate affects everything including migration and educational tourism.


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