Naira loses steam, drops against the dollar at parallel market as speculators show resistance

This represents a N70 or 4.5% loss when compared with the N1570/$1 that was recorded on Friday, December 6, 2024, as the predicted resistance of forex speculators appears to have reared its ugly head.

A top Bureau De Change (BDC) operator had told Naijaonpoint that the hitherto huge dollar supply in the forex market had dried up as the resistance to the continuous appreciation of the local currency heightened.

He said, ‘’And the prediction of speculators resistance is what happened today as the naira lost value from #1535/$ on Friday to N1640 /$ this evening at the close of business. The hitherto dollar supplies in the market became completely dried as resistance to the appreciation of the local currency heightened.’’

Meanwhile, some other sources quoted the exchange rate at N1665/$1  at the parallel market.

Also, according to data from the CBN, the naira depreciated at the official EFEM market trading at N1538.5 on Monday, December 9, 2024, as against the N1535/$1 recorded on Friday, December 6, 2024. This represents a N3.50 or 0.23% drop.

This appears to have widened the gap between the official rate and the black market rate from N35 to N101.5.

The introduction of EFEMS by the CBN appears to be driving transparency and efficiency in Nigeria’s forex market with the positive gains on the naira evidence of the impacts.

The centralized pricing mechanism has been pivotal in reducing speculative behaviour and bolstering confidence in the naira.

Naijaonpoint had earlier reported that the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, had warned that forex speculators will resist the rapid appreciation of the naira to cover their losses.

He said, ‘’Market is dull. Demand is very weak and supply very huge. The development in the market calls for circumspection. Already, there is a huge loss on speculators and currency substitutions.

‘’I can see speculators resisting the appreciation to cover their losses and the CBN needs to keep the momentum on ensuring hopes. Sometimes I wonder if the inorganic appreciation of the naira falls within the CBN templets.

The CBN should first maintain the momentum and discourage illegal behaviours of speculations and currency substitution and engage the BDCs where volatility is pervasive.’’