• Tuesday, April 16, 2024
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BusinessDay

Naira gains to N1,700/$ after CBN clampdown on crypto platforms

Naira soars, prices stall: Why relief for Nigerian consumers is slow!

The naira has appreciated against the dollar, gaining 11.76 percent at the parallel market, commonly referred to as black market, after the Central Bank of Nigeria (CBN)’s clampdown on crypto platforms.

The local currency, which peaked at N1,900 (and N2,000 in some areas) on Friday has recovered to N1,700 per dollar on Monday morning according to data collated from some street traders.

The Naira strengthened to as high as N1,500 per dollar during the weekend.

The naira is pairing losses after the CBN’s hammer fell on crypto exchange platforms like Binance and others last week.

Telecommunications firms have been asked to restrict access to the websites of cryptocurrency firms such as Binance, OctaFX, Coinbase and others, months after the Central Bank reversed an initial ban on the crypto transactions in the country.

The new restriction on crypto websites is aimed at slowing currency speculation activities in the country.

The raid on black market operators by the EFCC and DSS across Abuja and Lagos is also causing a stir.

The government’s secret police known as DSS and the Economic and Financial Crimes Commission (EFCC) extended their clampdown to Lagos after arresting over 100 Bureau De Change (BDC) Operators in Abuja.

“The EFCC and the DSS came to Apapa and arrested some traders. They seized the dollars and carried them away,” one of the traders told BusinessDay.

“At Haji camp, they arrested 40 BDCs,” an operator told BusinessDay in anonymity.

Another factor driving market sentiment is an unconfirmed report that the Central Bank of Nigeria (CBN) is trying to resume dollar sales to the BDCs.

The CBN’s spokeswoman is yet to respond to BusinessDay’s inquiry on this.

“The action of the government agencies is a wrong approach and it is not sustainable to stabilise the naira,” a BDC operator said under anonymity.

On Friday naira fell to a record low of 1,665.50 per one dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from the FMDQ Securities Exchange.

This represents a 5.65 percent loss over N1,571.31 per dollar quoted on the previous day. The naira depreciation was attributed to strong demand for dollar amid shortage.

The intraday high strengthened to N1,805 on Friday from N1,851 on Thursday, while the intraday low fell marginally to N1,301 as against N1,300 closed on Thursday.

Muda Yusuf, director/CEO, Centre for the Promotion of Private Enterprise, said “I do not think it will have any significant effect because it is like leaving the causes and fighting the symptoms. It cannot solve the problem. “You need to address the causes before the problem. There are better ways, particularly using technology,” he said.

Peter Obi, the presidential candidate of the Labour Party in the 2023 elections, has criticized the reported crackdown on BDC operators by government agencies, describing it as ill-advised and misdirected.

On X platform, the former governor of Anambra State expressed his belief that the action would exacerbate the country’s exchange rate situation rather than improve it. He emphasized that Bureau De Changes are not the main providers of foreign exchange.

“The recent reported attacks and disruption of the business activities of BDC operators in different urban centers across the country by Government Agencies, are ill-advised and wrongly directed,” he said.

“Rather than solve the problem, the action will further escalate and worsen the exchange rate situation in the country.

“The BDCs are not the primary suppliers of forex nor do they create demand. They only provide a market to sellers and buyers of foreign currency,” Obi said

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