Naira Surges Against Dollar after Tinubu-Shonubi Meeting: Trading at N840/$ in Parallel Market

The Nigerian currency, the naira, made a remarkable recovery against the US dollar on Wednesday, gaining as much as N100 in the parallel market. The naira closed at N840/$ in Lagos and N850/$ in Abuja, compared with N940/$ and N950/$ respectively on Tuesday.

The naira also appreciated at the official market, the Investor and Exporter (I&E) window, where it closed at N759/$, creating a N81 gap between the official and parallel rates. The I&E window recorded a $61 million turnover on Wednesday.

The naira’s rally was attributed to the outcome of the meeting between President Bola Tinubu and the Acting Central Bank of Nigeria (CBN) Governor Folashodun Shonubi on Tuesday. The meeting was said to have sent positive signals to the forex market, as speculators anticipated a major policy shift by the apex bank.

According to sources, the CBN might flood the market with dollars in the coming days to check the fall of the naira and restore confidence in the economy. However, some financial experts warned against this move, saying it could backfire if not well managed.

Dr. Victor Adoji, a financial analyst, said that releasing more dollars into the system could be counterproductive, as there is a huge amount of money outside the banking system that could absorb the supply. He advised the CBN to assess the demand portfolio for the dollar before taking any action.

A Bureau De Change (BDC) operator in Lagos, Garuba Sarki, said that many forex dealers are reluctant to buy dollars at the moment, fearing that they might lose money if the naira continues to appreciate. He said that many speculators are taking a cautious approach, waiting for the convergence of the official and parallel rates.

He added that increasing the funding for BDCs or allowing banks to sell dollars to retail customers would boost the naira’s value further.

The President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, urged the government to enhance financial intelligence and track down people with proceeds of corruption who are putting pressure on the forex market. He said that these people are manipulating the market and causing artificial scarcity of dollars.

He also called for a reduction in the country’s dependence on imported goods and services, especially food and energy, which account for a large chunk of the forex demand. He said that improving domestic production and security would help to stabilize the naira.

Richard Obire, a former executive director of Keystone Bank Limited, agreed with Gwadabe’s views, saying that Nigeria’s consumption pattern is skewed towards foreign products, which drains its foreign reserves. He also blamed corruption-driven capital flight for weakening Nigeria’s productive capacity.

He suggested some short-term measures to increase the supply and reduce the demand for hard currencies, such as encouraging remittances from Nigerians abroad, tackling insecurity that hampers food production, and providing incentives for local industries to reduce imports.

He also stressed the need for long-term structural reforms to diversify the economy, improve governance, and enhance human capital development. He said that these would create a conducive environment for investment and growth, which would ultimately strengthen the naira.

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Patrick Odey

Patrick Odey, a native of Benin, Edo State. He studied the English Language at the University of Benin, Edo State. He is a Blogger Contact: [email protected]

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