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FX Crisis Traders lose as naira rebounds to 720/dollar

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The value of the Naira to the US Dollar, has rebounded by 20.8 per cent to 720/dollar at the parallel
market, findings by Webteam@ipledge2nigeria have shown.

This comes two weeks after the local currency came under severe pressure on the black market,
following the decision by the Federal Government to redesign the naira.

The Naira which continuously fell against the Dollar last week, tumbled to an all-time low of 910/Dollar
last weekend.

However, the currency began a rebound against the greenback on Monday, after a week-long
clampdown on foreign exchange dealers in Lagos, Kano and other major cities by personnel of the
Economic and Financial Crimes Commission.

EFCC officials have arrested over 90 Bureau De Change operators across major cities in the country over
allegations of currency hoarding and aiding politically exposed Nigerians and other criminal elements in
money laundering.

The naira which was bought and sold on the streets of Lagos and Abuja between 735/Dollar and
745/Dollar about two weeks ago, began a free fall shortly after the Naira redesign policy was announced
by the Federal Government.

On Monday, however, the naira rebounded, and had an exchange rate between 850/Dollar and
860/Dollar. The national currency also gained significantly on Tuesday and Wednesday and closed at
720/Dollar on Thursday.

Financial analysts and forex dealers who spoke to our correspondents attributed the development to
market sentiment and the activities of the EFCC personnel.

The clampdown on forex dealers was said to have forced several BDCs into hiding, a move that
reportedly made many politically exposed persons and currency speculators hold back in their demand
for the greenback.

There has been huge demand for the dollar at the parallel market in Lagos, Abuja and other cities.
Speaking with our correspondents on Thursday, a BDC operator at the Murtala Muhammed Airport,
Lagos, Mustafa Abdullahi, noted that he bought the local currency for 715/Dollar and sold it for
720/Dollar.

He said several BDCs had gone into hiding following the EFCC clampdown, adding that the demand for
the greenback had dropped significantly.

“Many of our people have lost hundreds of millions of Naira due to the fall. Many of them bought the
dollar when it was over N800. Now the US currency has started falling and they are losing several
millions. I personally lost millions of Naira.”

Muhammed told our correspondent that some BDCs were licking their wounds because some had
bought over $500,000 at about 820/Dollar in anticipation of further a drop in naira value.

“We are in a big trouble unless the Dollar rises again. Many of our people bought a lot of Dollars, hoping
it would gain further,” he told one of our correspondents.

A currency dealer in Ikeja, Lagos, simply identified as Ahmed Bello, said he was buying and selling the US
currency for N715 and N720.
However, the President, Association of Bureau de Change Operators of Nigeria, Aminu Gwadabe, said
market sentiment and the news of the naira redesign drove the market in the past two weeks.
He explained that the rebound of the naira had made many currency speculators lose millions of naira. 
According to him, many forex dealers did not know the naira would rebound too soon.
He also said that the recent arrest of some Bureau de Change operators likely did not help the rebound
process.
He further noted that there was a possibility that a number of speculators were cautious and aware of
the volatile situation, which might have prevented them from any losses.


He, however, noted that speculation was a high-risk venture which didn’t always reward partakers.
A development economist, Dr Aliyu Ilias, noted that the economy had yet to stabilize; therefore the
Naira might still experience a decline, especially with the upcoming elections.

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