The naira gained about 30 per cent on Wednesday against the dollar at the parallel market to trade between N250 and N280 from N364 at which it sold on Tuesday ending two weeks of free fall when it peaked at N403 against the greenback at the parallel market last week.
The local currency had begun a gradual recovery on Friday, firmed sharply at the parallel market yesterday as retail traders, having anticipated a cut in its official rate and stocked up on dollars, bought the local currency back after the government said it would not devalue.
The naira rate closed at N197.50 on Wednesday at the official interbank market, where the CBN limits introduced late last year to defend a currency peg have restricted access to dollars.
That has funnelled demand for dollars on to the parallel market, a flow further fuelled by speculation of a possible weakening of the peg.
The Acting President of the Association of Bureau de Change of Nigeria (ABCON), Aminu Gwadabe, said the market was reacting to President Muhammadu Buhari’s ‘no devaluation’ stance.
He, however, expressed ABCON’s support for President Buhari not to allow further devaluation of the naira.
Gwadabe, who said the association was in partnership with the authorities to step up efforts to rid the market of illegal currency traders stated: “Like the President indicated recently, since the only significant thing we export is crude oil, devaluation will do more harm to the economy than good. So we also say no to further devaluation of the naira!” he stated.
He also affirmed ABCON’s backing to ensure its members comply with the Central Bank of Nigeria’s regulation as well as operate within the approved margin of 3.5 per cent with the hope that the demand and supply situation would improve to restore calm and stability in the market.
Source: The Sun