Traders in heavy lose as naira rebounds to 720/dollar

As the naira rebounded by 20.8 percent to 720/dollar at the parallel market on Friday, many traders are already suffering significant losses.

The change occurred two weeks after the local currency experienced intense pressure on the black market as a result of the Federal Government’s announcement to redesign the naira.

Last weekend saw the naira plunge to an all-time low of 910/dollar against the US dollar after falling steadily all last week.

However, the currency started to strengthen against the dollar on Monday following a week-long crackdown on foreign exchange dealers by EFC personnel in Abuja, Lagos, Kano, and other significant cities.

Over 90 Bureau De Change employees had been detained by EFCC agents across the nation’s major cities on suspicion of currency hoarding and aiding politically exposed Nigerians and other criminal elements in money laundering.

After the Federal Government decided to redesign the local currency, the naira, which was bought and sold on the streets of Lagos and Abuja between 735 and 745 per dollar about two weeks ago, went into free fall.

However, the naira recovered on Monday and traded between 850 and 860 per dollar. On Tuesday and Wednesday, the local currency increased significantly and steadily before closing at 720/dollar on Thursday.

Speaking to our correspondents, financial analysts and forex dealers explained that the EFCC’s operations and market sentiment were to blame for the development.

Many BDCs were allegedly driven into hiding as a result of the crackdown on forex dealers, which reportedly caused many politically exposed individuals and currency speculators to hold back on their demand for the dollar.

READ ALSO: Naira Redesign: Politicians won’t be allowed to intimidate voters – Buhari

In other news, the Federal Government may soon move to ensure that recalcitrant debtors are barred from participating in government projects and contracts without prior clearance by the Asset Management Corporation of Nigeria (AMCON).

This was disclosed in a press statement signed by Laolu Akande, the Senior Special Assistant to President Muhammadu Buhari on Media & Publicity.

The statement explained that the policy move was recommended by an inter-agency committee established by the government to recover debts owed to AMCON.

Vice President Yemi Osinbajo, who received the committee’s interim report on behalf of the government, assured that the recommendation would be acted upon accordingly. He also agreed that AMCON debtors engaging in business with government agencies is a due diligence lapse that needs to be checkmated.