From its shameless performance against the major foreign currencies, particularly the America dollar, Nigeria’s national currency, Naira, has appreciated from its worst performance ever in history, as it exchanged for N730/1USD from N900/1USD five days ago.
This latest development, if sustained, may shatter experts prediction that the Naira will exchange for N100/1USD before December, 2022; an argument predicated on the panic buying that followed the announcement of redesigning of some Naira denominations by the CBN.
Adebayo, a black market operator at Lagos Airport Hotel said the initial depreciation was caused by panic buying.
“Egbon (brother) even those of us that are in this business ere afraid. Because, we whatever happens to the dollar will have negative or positive effect on the common man on the street. we are happy that things are coming back to normal now. 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.”
while celebrating the increase in the value of the Naira, some Nigerians on social media wondered if it will lead to reduction in the prices of products in the country. Some insisted that the N730/1USD is not enough, arguing that N400/1USD is the ideal exchange rate.
A Twitter user, @whitenigerian said: ”Dollar don crash but pries for market never crash” while another user, @itsSh0la said: ”Let’s have 1 dollar back to N400 for a start.”
The backstory: 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notes would be redesigned, the Central Bank of Nigeria (CBN) gave Nigerians less than 100 days to “dispose” of the outdated banknotes they still had in their possession.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.