JThe naira, which has been falling against major currencies over the past two weeks, rallied, posting gains in the parallel market as it traded at around 730 naira to the dollar on Thursday.
Recall that the Nigerian currency hit an all-time low of around 850 naira to the US dollar on the black market shortly after the Central Bank of Nigeria (CBN) announced its intention to redesign the high value banknotes of 200 naira, 500 naira and 1,000 naira and reissued on December 15.
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The CBN said the affected banknotes would cease to be accepted after January 31, 2023 and asked currency holders to pay their banknotes to banks before that date.
While some began to pay their hordes of naira notes in banks, many sought refuge in the dollar, mopping up dollar notes from exchange offices, to preserve their value.
In Lagos, black market traders attributed the recovery of the naira to its scarcity, saying it was responsible for the inability of speculators buying dollars to bid higher rates for the greenback.
“There are no naira in the system,” a forex trader told the Daily Trust in the central district of Lagos, the heart of the financial market.
He said the dollar had risen to 730 naira, but said if a seller wanted the naira paid into their bank account, it would be at a lower rate of 700 naira. In Port Harcourt, a dealer priced the dollar at N700 but charged N720 to sell dollars to buyers.
In Abuja, around Zone 4, some BDCs recalled the decline in dollar patronage on various news reports.
According to Umaru Abu, “People are afraid that with recent reports that the United States is rejecting the $100 note, buying the dollar might be a risk, but we have now heard from CBN officials that this is not is not true.
“Some of my colleagues said that maybe people are buying more assets due to the CBN’s naira redesign policy and reducing their spending in dollars. But we have seen a certain drop in attendance since Tuesday evening, ”he noted.
Meanwhile, the Institute of Chartered Accountants of Nigeria (ICAN) is concerned about the pressure exerted on the naira by the US dollar.
One dollar earlier traded between 780 and 820 naira in the parallel market, well above the official rate of around 450 naira/$, due to insufficient supply, which has implications for inflation and the supply of raw materials and services.
ICAN Chairman Mallam Tijjani Isa said so on Thursday in Lagos during a briefing to commemorate International Accountancy Day 2022.
“As a nation, we need to find a permanent solution to the forex crisis if we are to grow at the desired pace,” he said.
The President along with the Chairman of the Institute’s Past Presidents Corps, Dr Sir Ike Nwokolo, led other members to embark on a health walk among other activities to commemorate International Accountancy Day 2022.
Naira gain may be short-lived – AZA
While the latest strengthening of the naira against the dollar could be good for containing rising inflation, analysts believe that the local currency’s recovery is unlikely to be sustainable, noting that the flight to the dollar will resume.
“While Nigerian currency exchange operators have confirmed reduced demand at current parallel market levels, we expect dollar appetite to pick up in the coming days and the naira to resume its recent decline,” wrote AZA Finance in a note to clients on Thursday.
The CBN set limits on the acceptable amounts of cash deposits into accounts, warning that it would monitor such transactions in conjunction with the Economic and Financial Crimes Commission.
Since then, the EFCC has raided the offices of money changers and black market traders in Abuja, Lagos and other cities.
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