Naira Crashes to N487/$ at Black Market After Emefiele’s Attack

Naira Crashes to N487/$ at Black Market After Emefiele’s Attack

Image Credit: Jean Chung/Bloomberg

By Adedapo Adesanya

The black market segment of the foreign exchange (FX) market may have reacted negatively to an attack from the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, on Tuesday.

The apex bank chief had described the parallel market as illegal, adding that it was a place where bribery and corruption thrive, urging genuine forex customer not to patronise traders at the platform because they would be supporting actions aimed to sabotage the economy.

“Parallel market and quote me is a tainted market in Nigeria, where people who desire to deal in illegal foreign exchange transactions including sourcing of FX cash for purposes of offering bribes, corruption, that is where they deal,” Mr Emefiele had said while addressing newsmen at the end of the two-day Monetary Policy Committee (MPC) meeting in Abuja.

On Wednesday, the value of the Naira against the Dollar at the black market depreciated by N4 apparently due to cautious trading as traders were being careful of the next action the government might want to take against them.

Recall that in 2016 and 2017, the local authorities used securities operatives to disrupt activities of forex traders at the parallel market in an attempt to control the exchange rate of the local currency against the foreign currencies.

Yesterday, according to information scooped by Business Post from some forex traders at the black market in Lagos, caution was the motto of the market and this caused an artificial scarcity, spiking the exchange rate to N487/$1 from N483/$1.

Also, the Naira lost N9 on the British Pound Sterling at the same market window on Wednesday to trade at N629/£1 versus N620/£1 of the preceding session while on the Euro, the Naira lost N5 to close at N575/€1 in contrast to N570/€1.

A similar scenario played out at the Investors and Exporters (I&E) segment of the FX market yesterday as the domestic currency depreciated by N7.75 or 2.01 per cent against the greenback to quote at N393.25/$1 in contrast to N385.50/$1 it was sold previously.

This was the heaviest lost recorded at the market window in a long time and it came despite the sharp decline in the demand for FX at the market segment at the midweek trading session as transactions worth $52.09 million were carried out in contrast to $163.87 million exchanged at the prior session, indicating a decline of 68.2 per cent or $111.78 million.

However, at the Bureaux De Change (BDCs) window, the Naira closed flat against the US currency at N386/$1, according to data from the Association of Bureaux De Change Operators of Nigeria (ABCON).

Likewise, at the interbank window, which is the official exchange rate platform of the central bank, the domestic currency traded flat against the greenback at N379/$1.

At the cryptocurrency market yesterday, the value of the Bitcoin (BTC) appreciated by 0.1 per cent to sell at N9,303,003.60. It was the only digital currency that gained during the session.

The value of Ripple (RPX) and Dash (DASH) depreciated by 7.8 per cent to sell at N308.90 and N52,040.01 respectively, Ethereum (ETH) fell by 6.3 per cent to N284,103.27, Litecoin (LTC) lost 7.1 per cent to sell at N40,912.60, the United States Dollar Tether (USDT) went down by 0.3 per cent to N490.72, while Tron (TRX) plunged by 5.6 per cent to trade at N16.92.

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