The naira rose by 17.3 per cent on Tuesday against the dollar at the parallel market to 310 from 375, which it traded on Monday.
The naira had been on a free fall in the
last two weeks, peaking at 391 against the greenback at the parallel
market last week Thursday. The local currency, however, began a gradual
recovery on Friday.
Foreign exchange dealers told our
correspondent on Tuesday that the naira’s recovery could be linked to
the gradual inflows of foreign exchange into the forex market.
“There have been inflows into the market
in recent days; the central bank and oil companies have been selling
dollars,” a forex dealer at Apapa in Lagos, Alhaji Saliu Mustapha, said.
Forex dealers said the local currency
was set to gain further momentum in coming days, arguing that most
traders were rushing to reduce the amount of dollars in their holdings.
Currency strategist at the Ecobank
Nigeria, Mr. Kunle Ezun, said the depreciation the naira had recorded in
the last two weeks was mainly artificial, arguing that it was part of
the activities of currency speculators to force the Central Bank of
Nigeria and the Presidency to devalue the naira.
He said, “The naira is recovering
because of two things: The Presidency’s hard stance on not devaluing the
naira and the decision of the Bureau De Change operators to peg their
profit margin at 3.5 per cent. To me, these are the two things that have
helped to restore stability and calmness to the market.”
An economist and currency expert at
BestWorth Holdings, David James, said the naira would continue rise to a
point where the true value of the local currency could be found against
the dollar.
He added, “I am of the opinion that the
naira’s recovery will continue to somewhere around N250 per dollar. This
will likely be around the point where the equilibrium exchange rate may
be found.”
But the Chief Executive Officer, Cowry
Assets Limited, a research and investment advisory firm, Mr. Johnson
Chukwu, believes the naira rally might not be sustainable, adding that
the CBN lacked the stock of external reserves to drive an enduring
stability in the forex market amid the declining global oil prices.
“This may not be sustainable; we don’t have the forex to maintain this rally,” he stated.
But Ezun said, “The true value of the
naira will be found something around 290 against the dollar; and I
believe that is where current rally may stop. Or sometime in the near
future, it may stop around that figure.”
The economy of Nigeria has been battered
by the plunge in global oil prices. The nation depends on crude oil for
over 90 per cent of its forex earnings.
The fall in the fortunes of the naira at the parallel market has
affected companies and industries, causing economy growth to drop from
6.8 per cent to an average of 3.4 per cent.
The CBN has been rationing dollars as
part of the measures to preserve the external reserves, which has hit an
11-year low of $28bn.
Meanwhile, the CBN-licensed Bureau De
Change operators on Tuesday said plans were ongoing to transform their
operational structure to compete in the global regulatory currency
market.
The Acting President, Association of
Bureau De Change Operators, Alhaji Aminu Gwadabe, who stated this at a
news conference in Lagos, said the move would help the local currency
retailers to increase dollar liquidity in the nation’s forex market.
He said, “ABCON will introduce a series
of measures aimed at transforming the operations of the BDCs in Nigeria
to align with global best practices.
“We will seek the approval of relevant
monetary and fiscal authorities as well as partnerships for effective
usage of the nation’s external reserves to enhance domestic trade and
foreign exchange management.”
The announcement came barely six weeks
after the CBN had stopped dollar sale to the BDC operators as part of
the measures to preserve the nation’s fast-depleting external reserves.
The Nigerian economy has received a
beating from the fall in global crude oil prices, with the naira
tumbling against the dollar at the parallel market.
Gwadabe said ABCON would introduce live and real-time online currency trading platforms in the Nigerian forex market, as part of the plans to gain access to the global regulatory currency market.
by Oyetunji Abioye and Nnodim Okechukwu....
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