Naira opened trading for the year at the Investors and Exporters’ (I & E) window on an upswing yesterday. It was quoted at N422.67 per dollar, gaining N8.75, as against last year’s closing rate of N435/$.
The local currency fell to a record low at the spot market on the last trading day of 2021, closing at $435/$.
The quote was the lowest naira had plugged at the official market. With the closure quote, the naira traded at a discount of over 15 per cent against the dollar at the official Nigerian Autonomous Foreign Exchange (NAFEX) year-on-year.
Experts described the dip as an indication that the currency crisis, triggered by rising imports and speculative trading, was not over, urging Nigerians to brace for more volatility this year.
Yesterday, the greenback started trading at N426.25/$ at the official window and closed at N422.67/$. At the parallel market, the naira continues to trade sideways against the dollar amid tight liquidity.
At popular Lagos street markets, the naira held strong around N565/$ but operators suggest the exchange rate could break down soon as activities resume fully for the year and Nigerians in the diaspora who came home for yuletide begin to travel back.
Recall that at the weekend, the Association of Bureaux de Change Operators of Nigeria (ABCON) raised the alarm that their operations have been rendered redundant for lack of access to foreign exchange since July when the Central Bank of Nigeria (CBN) axed their weekly supply.
In a statement, ABCON President, Dr. Aminu Gwadabe, said the BDC sub-sector was becoming comatose and called on the apex bank to de-risk the sub-sector to allow them access to autonomous sources such as diaspora remittances to continue operation.
“The recognition of the role of BDCs in Nigeria’s financial sector remains the first step to building a sustainable and viable forex market that is comparable to what is obtained in other economies. But getting the Nigerian BDC sector to where it should be demands hard work, quality leadership, regulatory foresight and sound government policies,” Gwadabe said, who claimed that N1 trillion investment in the business was being threatened by illiquidity.
Operators, who had interacted with The Guardian, said illiquidity remained a major challenge and that they could barely meet 30 per cent of the effective market demand.
But the apex bank and some other stakeholders have accused the BDCs of hoarding, speculation and other anti-market activities – the same reasons given by the monetary authority for closing its support window to the market.