The naira has recovered five days after dropping below N900/$, rebounding by N730/$. The local currency is currently in a stronger position than it was before to the announcement of the makeover.
The naira is trading around N730/$, just days after hitting an all-time low due to market speculation in response to the news of the Naira redesign. This is according to black market traders who spoke with Nairametrics.
Five days ago, an exchange rate of N900/$1 was a psychological torment few analysts expected to end soon. In other words, the naira’s miraculous rise was not expected to happen so quickly.
The appreciation explained: 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.”
Bola, another black market operator, said the market is too violate 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.”
Nigerians react: Some people have had a lot to say about the reported appreciation of the naira. One of the is financial and investment expert Kalu Aja who acknowledged the massive appreciation by simply tweeting “Naira is rising”.
Daniel Regha 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.”
Lastly, @Naiia PR said, “The gains the naira is making against the dollar should show in the price of your products Importers, please don’t be unfortunate 🙏🏽”
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.
As a result of the massive currency speculation, the CBN collaborated with the EFCC to revoke BDC licenses. The Economic and Financial Crimes Commission (EFCC) raided black market operators in Lagos and Abuja a few days after the CBN announcement. Approximately 87 forex dealers were arrested in the Federal Capital Territory, Abuja, Lagos, and Kano.