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Naira sustains positive run against Dollar at parallel market
The naira is trading around N730/$ days after it hit an all-time low due to the massive market speculation reaction to the news of its redesign.
Five days ago, an exchange rate of N900/$1 was a psychological torment only a few analysts expected to end soon. In other words, the naira’s miraculous rise was not expected to happen so quickly.
Abu, a black market operator who resides in Lagos, said that the market had come back to normalcy, and the initial depreciation was caused by panic buying.
“After the CBN redesign announcement, we received so much demand for the dollar that came out of nowhere. This was because petty people panicked about the news of the creation of the new Naira note.”
“I always knew it would come down, but I never thought it would be this fast.”
READ ALSO: Saboteurs and Naira redesigning project
Bola, another black market operator, said the market is too violent to predict, but he was happy about the appreciation. He said:
“The forex market is becoming increasingly difficult to predict because it is too volatile. I can’t say for certain what is causing the movement of the Naira, but I am pleased it’s appreciated.”
According to a financial and investment expert, Kalu Aja who acknowledged the massive appreciation complained about the increase in inflation caused by the sharp depreciation of the Naira.
He said: “Dollar to the naira exchange rate is dropping, but the prices of goods & services in Nigeria remain the same (extremely high). So I don’t see how this news is worth celebrating. Besides, the exchange rate was much lower before the APC took over. This isn’t a win for the APC or CBN.”
Another Twitter user, @ManLikelcey, was optimistic about the fate of the naira. He said: “Dollar to Naira dropped to 680, and it’ll drop more in the coming weeks.”
While announcing that the N1000, N500, and N200 naira notes would be redesigned, the Central Bank of Nigeria (CBN) gave Nigerians less than 100 days to “dispose” of the outdated banknotes they still had in their possession.
Although the goal of the monetary policy is to reduce the amount of money that is not in the banking system and control inflation, the naira is now in a worse situation than before.
Following the announcement, the local currency experienced its steepest drop against the US dollar on the black market. On October 26th, the naira was trading around N760/$1, and on November 6th, it was trading around N900/$1.