Market News

(Bloomberg) -- The naira gained 22% against the dollar this week, rising from a record plunge as authorities clamped down on money trading, according to traders.

The local unit rose to 700 naira a dollar on Friday on the widely-used black market compared to 890 last week, according to Abubakar Mohammed, operator of a bureau de change that tracks the data in Lagos, the nation’s commercial hub. Still, continued shortages of the greenback meant the tightly-controlled official exchange rate fell to a fresh low of 444.05 naira a dollar before rebounding to close at 443.38.

Demand for the US currency has surged since the Central Bank of Nigeria said in October that it plans to replace 200-, 500- and 1,000-naira notes starting mid-December. Nigerians with undeclared naira stashes rushed to buy the greenback but surveillance from the central bank and anti-corruption authorities has spooked them, said Aminu Gwadabe, president of the Association of Bureau de Change Operators of Nigeria.

The Economic and Financial Crimes Commission has the power to go after persons in possession of illegally earned money that they are trying to launder, Wilson Uwujaren, spokesman of the commission, said by phone. “BDCs who are doing legitimate business and are not involved in money laundering have no reason to fear,” he said. 

Nonetheless, the tight surveillance of currency traders by the commission may have driven transactions underground, Gwadabe said.  “Many are scared, thereby limiting to a large degree the volume of transactions happening in the market,” he said.