BREAKING: Speculators lose big as Naira rallies across markets, trades below N900/$1 at P2P
On the official front, the Nigerian Autonomous Foreign Exchange Market (NAFEM) witnessed the Naira closing at an encouraging N776.14, marking its strongest finish since October 13th.
Nigerians Celebrating, Households in Nigeria spend N22.7 trillion on food
Nigerians Celebrating
Research Team
In an unexpected twist of financial fate, the Naira has staged a dramatic rally against the US dollar, sending ripples across multiple markets, as reported by Nairametrics.
This surge represents a significant setback for currency speculators who bet against the Nigerian currency.
For the first time since August 2023, the exchange rate has dipped below the N900 to $1 mark on peer-to-peer (P2P) platforms, including Binance, indicating a robust turnaround for the Naira.
By 6:30 p.m. on Friday, data from the acclaimed Binance Crypto trading platform showed the exchange rate at an impressive N855 to $1. This development highlights the Naira’s impressive recovery trajectory.
In the meantime, the black market – often regarded as an unofficial gauge of the currency’s vigor – has listed exchange rates ranging from N1000 to N1,100 for $1 in cash transactions. The urgency displayed by speculators, eager to divest their short positions, underscores their anticipation of the Naira’s potential further gains.
In conversations with Nairametrics, dollar holders expressed alarm over the recent developments, fearing considerable financial losses.
One concerned speculator lamented, “I should have sold when it hit N1200/$1. Now I’m caught between selling at a loss or holding on in hope, and I really don’t want to end up losing more.”
Several black market dealers, in discussions with Nairametrics, shared the sentiment that the Naira’s rally might be linked to the recent influx of positive news reports, notably those highlighting the government’s progress in clearing forex backlogs.
A black market operator, requesting anonymity, mentioned that the market may be transitioning from ‘panic buying’ to ‘panic selling,’ a stark reversal of the previous trend.
On the official front, the Nigerian Autonomous Foreign Exchange Market (NAFEM) witnessed the Naira closing at an encouraging N776.14, marking its strongest finish since October 13th of the current year, a notable improvement from the preceding day’s close of N793.2.
The breakthrough below the N900 threshold on the p2p market is being celebrated as a considerable psychological triumph by Nigerian government officials and their surrogates on social media.
They have been issuing warnings for several weeks that speculators were poised to face significant losses. As the Naira consolidates its strength, these predictions appear to be coming to fruition.
Why the rally
The catalyst behind the Naira’s surge is multifaceted. It can be credited to an amalgam of factors such as augmented foreign exchange inflows, deft policy interventions by the Central Bank of Nigeria (CBN), and stringent measures against illegal financial activities.
Nairametrics earlier reported that the central bank focused on Tier 2 Nigerian banks and international banks with over 75 to 80% of the foreign exchange forward contracts obligations cleared.
Findings show that Citigroup ($72 million), Stanbic ($125 million), and Standard Chartered ($63 million) are among the companies that are receiving FX futures deliveries this week
The FG also stated that it expected to spend $10 billion to settle FX obligations, support the country’s FX market, and stabilize the naira.
Wale Edun, the Minister of Finance stated that FX liquidity will improve in the coming weeks. He further highlighted that discussions with sovereign wealth funds willing to invest and provide advances along with investments are in advance phases.
Nairametrics