The unexpected happened on Thursday as the naira staged a comeback, exchanging for about N730 to a dollar.
It was sad news for some currency speculators who bought the dollar at N800 and above in the last two weeks.
‘Dollar’ is currently trending among the top ten topics on Twitter in Nigeria as tweeps discussed the unusual development.
The Central Bank of Nigeria (CBN) announced about two weeks ago that high-value currency notes of N200, N500 and N1,000 will undergo a redesign and re-issuance from December 15.
The apex bank said the affected currency notes would cease to be accepted after January 31, 2023, and asked currency holders to pay their currency notes to the banks before then.
The forex market responded negatively as the Naira began a free fall and hit an all-time low of about N850 to the US dollar at the black market. The official rate remained at N450/$, creating a get-rich-quick window for those who could obtain the dollar at the official rate and round trip it for profit.
While many people with large cash at home rushed it to the banks, some turned to converting their naira to dollar to preserve the value. They consequently mopped up the dollar bills from Bureaus de Change across the country.
The value of the greenback automatically shot up.
But things seem to be going in the reverse direction now.
Bureau de change operators spoken to by Daily Trust in Lagos and Abuja confirmed that there has been a drop in the demand for dollars.
In Lagos, black-market traders attributed the recovery of the naira to its scarcity, saying this was responsible for the inability of speculators buying dollars to offer higher rates for the greenback.
“There is no naira in the system,” one currency dealer told Daily Trust in Central Lagos District, the heart of the financial market.
He said the dollar had risen to N730, but said if a seller wants naira to be paid into his bank account, it would be done at a lower rate of N700. In Port Harcourt, a dealer priced the dollar at N700 but demanded N720 to sell dollars to buyers.
In Abuja around the Zone 4 area, some BDCs recalled the drop in patronage of the dollar over varying accounts of information.
According to Umaru Abu, “People are scared that with recent information that the US is rejecting the $100 bill, buying the dollar could be a risk, but we have now heard from CBN officials that it is not true.
“Some of my colleagues said maybe people are buying more assets due to the CBN naira redesign policy and are cutting down spending in dollars. But we have observed some drop in patronage since Tuesday evening,” he noted.
The latest development has put currency speculators in a dilemma as to what to do. If the dollar falls any further, it will amount to a huge loss for many who bought the dollar in the last two weeks when it began a steep climb.
