The dollar has experienced a sharp decline in the parallel market on Tuesday, falling to as low as N790 from N930 earlier in the day.
The drop was triggered by the news of a possible intervention by the Central Bank of Nigeria (CBN) to stabilize the naira, which has been under pressure due to the removal of fuel subsidy and other factors.
The CBN had announced on Monday that it would take critical decisions to reverse the slide of the naira in the next few days, warning speculators to desist from betting against the currency.
The acting CBN governor, Folashodun Shonubi, said this after a meeting with President Bola Ahmed Tinubu at the Presidential Villa, Abuja.
Daily Trust reports that the dollar started losing value in the parallel market from N925 to N930 in the morning till around 4:00 pm when the news of the CBN intervention reached the Bureau De Change (BDC) operators. The BDCs are buying at N900 and selling at N910, after reaching N970 to the dollar earlier in the day.
At the Wapa forex market in Kano, the BDCs are buying at N875 and selling at N905 to the dollar. At Zone 4 BDCs market in Abuja, the BDCs are buying at N800 and selling at N790 to the dollar. However, at the Investors and Exporters window, the dollar opened at N789/$, got to a high of N799/$ and a low of N740/$ and eventually closed at N774/4, N10 higher than the N764/$ it closed the previous day.
The development has caused a lot of losses to many speculators who had bought the dollar at a higher rate than what it is being sold for. A customer who spoke to Daily Trust said he had asked about the exchange rate in the morning and was told it was N930 to a dollar.
He said he came back in the evening to exchange it and was told that it had crashed to N790 and he had no choice but to sell it at that rate.
The clerk to the National Assembly, Sani Magaji Tambawal, who also spoke to Daily Trust, said that the CBN had sent a bidding eligibility list to the BDCs for them to participate in the intervention. He said that nobody could predict what would happen next and that they were waiting to see what would happen on Wednesday. He said that the intervention could either appreciate or depreciate the naira further.
The director of Legal Services of the CBN, who represented the Acting Governor of the CBN, Kofo Salami Alada, said that the intervention would be technology-driven and would eliminate physical contact and movement of papers. He said that the students would be expected to apply for the loan from their homes using their unique codes assigned by their tertiary institutions, JAMB and other bodies involved in tertiary education.
He also said that the CBN would not be responsible for funding the intervention, but would act as the bankers to the fund. He said that the fund would be provided solely by the government and that they were working on how to avoid a constitutional crisis later when states would challenge funds being drawn from the federation account for the intervention.
Source: Daily Trust