On Wednesday, the Nigerian currency sank against the US dollar in both the official and parallel markets, reversing a modest gain experienced last week.
The Naira fell 0.55% to N874.71 per dollar at the close of business on Wednesday, according to figures from the NAFEM, where forex is legally transacted.
When compared to the N869.91 it closed on Tuesday, this is an N4.8 loss or a 0.55% fall in the local currency. The intraday high was N1097.50/$1, while the intraday low was N745.00/$1, marking a N352.50/$1 spread.
As seen in the Nigerian business news publication, Nairametrics, forex turnover at the closing of trade was $223.52 million, a 60.1% rise over the previous day, according to statistics acquired from the official NAFEM window.
Similarly, the Naira fell in the parallel FX market, where the currency is sold informally, with the exchange rate falling to N1130/$1, while peer-to-peer dealers quoted approximately N1110.10/$1.
The Nigerian Association of Bureau de Change Operators (ABCON) has urged people betting against the naira to be cautious. ABCON President Aminu Gwadabe issued the warning, noting that the Central Bank of Nigeria was planning to punish currency speculators.
"What is happening in the market and the continuous naira rebounds are the manifestations of the CBN double-edged sword measures of dollar liquidity injection and naira mopping through the instrumentality of interest rates hikes. It is a good development as it is the greatest risk to speculate, hoard, and substitute naira for other currencies," Gwadabe declared.
After the CBN began to clear the currency demand backlog in banks, the naira reversed its declining trend this year.
"As we continue to observe developments, there is the need for a caution in attacking the naira, as it all appears that the CBN has gotten the arsenal and the logic to continue to enshrine the success recorded," ABCON said. "The association noted that there had been "panic selling as against panic buying," it added.
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