Forex

Naira Nosedive: President Tinubu’s Optimism Clashes with Currency Crisis

Published

8 months ago

September 23, 2023

Nigeria’s President Bola Tinubu brought his message of optimism to the New York Nasdaq exchange this week, calling on investors to “be confident in Nigeria.”

However, his spirited demeanor contrasts starkly with the growing unease on the streets of Nigeria, where confidence in the national currency, the naira, is eroding rapidly.

On Thursday, the naira hit a historic low, and currency traders tracking the exchange rate predict it is teetering on the edge of reaching a 1000-per-dollar exchange rate on the parallel market. The naira’s value has fallen nearly 30% below its official rate on the FMDQ OTC trading platform as both individuals and businesses scramble to acquire U.S. dollars.

Ogho Okiti, Chief Executive of ThinkBusiness Africa, a Lagos-based advisory and data services firm, described the current situation as a “demand for foreign exchange stampede,” noting that the demand extends beyond imports to the preservation of value.

The recent plunge in the naira has dampened much of the optimism generated by President Tinubu’s reform program, which he unveiled shortly after taking office in June.

His initial promises included unifying the complex exchange rate system and abolishing costly fuel subsidies, which initially sent Nigerian markets soaring.

During his speech in New York, President Tinubu reaffirmed his commitment to these reforms, assuring investors that bottlenecks had been removed and the exchange rate had been stabilized. However, market experts have a different perspective. Many attribute the naira’s decline to the central bank’s failure to supply dollars to the official market, leaving buyers no choice but to turn to street traders for foreign currency.

This divergence has dramatically widened the gap between the parallel and official exchange rates, which had initially converged after Tinubu’s inauguration.

Market players argue that authorities are not allowing the foreign exchange market to function as a “willing buyer, willing seller” platform, as they had promised.

Ayo Salami, Chief Investment Officer at Emerging Markets Investment Management Ltd. in London, stated, “With the current restrictions in the FX market, it is not possible to form a realistic judgment on the value of the naira.”

Concerns about reforms have grown further, especially after Tinubu was compelled to suspend a planned gasoline price increase last month. Hopes for a prompt and substantial interest rate hike to stabilize the naira were dashed by the central bank’s announcement that next week’s policy meeting would be postponed indefinitely.

Currently, interest rates stand at 18.75%, while inflation approaches 30%.

Moreover, the confirmation of the central bank’s new governor, former Citigroup executive Olayemi Cardoso, is pending. This delay, along with the resignation of the acting governor and four deputy governors, has created a policy-making vacuum at the highest level.

Foreign investors remain cautious about investing in local assets due to fears of exposure to a depreciating naira and concerns about capital withdrawal. The authorities have also yet to clear a backlog of hard currency arrears totaling billions of dollars owed to foreign companies and investors.

The naira’s decline has also affected Nigerian dollar bond markets, with issues maturing in 2033 falling more than half a cent on Thursday to 76.5 cents, a significant drop from end-July highs. While the Lagos stock exchange closed slightly lower for a second consecutive day, it still hovers near the 15-year highs reached soon after Tinubu’s inauguration.

Segun Agbaje, CEO of Guaranty Trust Holding Co., summed up the situation, saying, “People are not going to come in until they’re sure that there is a certain amount of stability around the exchange rate, and that’s where we are.”

Foreign investors and Nigerians alike will be closely watching how President Tinubu’s government navigates these economic challenges in the coming months.

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Naira

Black Market Dollar to Naira Exchange Rate Today 17th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 17th, 2024 stood at 1 USD to ₦1,540.

Published

2 days ago

May 17, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 17th, 2024 stood at 1 USD to ₦1,540.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,560 and sold it at ₦1,550 on Thursday, May 16th, 2024.

This indicates a slight improvement in the Naira exchange rate when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

Buying Rate: ₦1,540
Selling Rate: ₦1,530

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Forex

SEC and ABCON Explore Collaboration for ‘Kolectyomoni’ Digital Currency Platform

Published

2 days ago

May 17, 2024

Samed Olukoya

The Association of Bureaux De Change Operators of Nigeria (ABCON) has initiated talks with the Securities and Exchange Commission (SEC) to explore collaboration on its upcoming digital currency market platform, ‘Kolectyomoni’.

This move was underscored during an official visit by ABCON representatives to the newly appointed Director General of the SEC, Dr. Timi Agama. Aminu Gwadabe, President of ABCON, conveyed the association’s eagerness to engage with SEC to ensure the smooth operation of its digital currency platform.

Gwadabe emphasized that ABCON recognizes the regulatory oversight of SEC in the financial sector and seeks its guidance to navigate the complexities of the digital currency market.

He pointed out that while digital currencies hold immense potential for financial inclusion and innovation, they also present regulatory challenges that require collaborative efforts between industry stakeholders and regulatory bodies.

Highlighting the significance of embracing digital currencies, Gwadabe noted, “The future of BDC’s business is digital currency.”

He stressed the growing adoption of digital currencies among Nigerians, citing statistics that reveal a rising number of participants in the digital currency ecosystem, with a substantial market size of $9 billion annually.

In response, Dr. Timi Agama expressed SEC’s openness to support and facilitate the growth of the digital currency sector in Nigeria.

He acknowledged ABCON’s initiative in launching the ‘Kolectyomoni’ platform and assured of SEC’s cooperation in providing regulatory guidance and oversight.

Agama reaffirmed SEC’s commitment to fostering innovation in the financial sector while ensuring investor protection and market integrity.

He underscored the importance of collaboration between regulators and industry players to develop robust frameworks that foster innovation and safeguard against potential risks.

Furthermore, Agama encouraged ABCON to finalize the development of the ‘Kolectyomoni’ digital currency platform and submit it to the SEC for thorough review and assessment by the technical team.

He emphasized the need for timely regulatory oversight to address emerging trends in the digital currency market and maintain regulatory compliance.

Naira

Black Market Dollar to Naira Exchange Rate Today 16th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 16th, 2024 stood at 1 USD to ₦1,560.

Published

3 days ago

May 16, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 16th, 2024 stood at 1 USD to ₦1,560.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,530 and sold it at ₦1,520 on Wednesday, May 15th, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.