Speculators should prepare for losses, CBN reacts as naira trades at N420/$

The naira continued its rally against the dollar at the parallel market section of the foreign exchange market.

Bureau de Change operators told TheCable on Wednesday that the naira exchanged for N420 per dollar.

This is a stronger position compared to the N448/$ exchange rate recorded on Monday.

The naira has been strengthening against the dollar since the Central Bank of Nigeria (CBN) announced that it would resume forex sales to BDCs.

The CBN, in a letter, said BDCs must not exchange the naira at more than N386/$ to end-users.

Before the announcement, the naira had been trading as low as N480 against the dollar.

There has been increased demand for the dollar since the pandemic began and the price of crude oil, Nigeria’s major source of forex earnings, took a hit.

When TheCable contacted Isaac Okorafor, the CBN spokesman, for comments on the situation of the market, he said: “Those speculators who think that they could play a trick and manipulate the market will continue to be punished by the same market”.

“They should prepare for very heavy losses because we believe that the Naira will eventually settle at a rate we believe is the true reflection of market fundamentals”.

In March when Nigeria began to feel the effects of the pandemic and crude oil price dropped, demand for the dollar increased due to fears that the naira would be devalued.

At the time, the CBN said the downward movement of the naira against the dollar in the forex market was caused by speculations that the currency will be devalued.

“We have begun a robust and coordinated investigation in collaboration with the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and FX dealers who are creating this panic, and the full weight of our rules and regulations will be meted out to them, including, but not limited to, being charged for economic sabotage,” the apex bank said at the time.