The naira, on Monday August 3 depreciated by N9 at the Bureau de Change as speculators and foreigners swooped on the parallel market to mop up excess dollars. The naira had appreciated by N35 from N245 per dollar to N210 last week, due to excess dollars in the market, occasioned by refusal of banks to allow foreign currency deposits into domiciliary accounts.
Investigations revealed that from the opening rate of N213, the parallel market exchange rate rose rapidly to close at N222 per dollar, implying N9 depreciation. Parallel market sources confirmed that the depreciation was triggered by increased demand by speculators and foreigners cashing in on the sudden appreciation of the dollar last week.
In addition, there was general unwillingness to sell among foreign exchange dealers due to the belief that the sudden and sharp appreciation of the naira last week, was a flash in the pan. Mr. Harrison Owoh, Chief Executive Officer, H.J Trust BDC said: “Dealers are not willing to sell. They are holding their dollars because they believe the situation (appreciation) will not last. In fact, somebody told me he would rather lend me his dollars, and not sell it. So that is why the rate is going up again.”
According to Mr. Aminu Gwadabe, President, Association of Bureaux de Change Operators of Nigeria (ABCON), the depreciation is driven by activities of speculators and foreigners. “The belief is that the appreciation of the naira and the policy that triggered it is not sustainable. It is believed that the gains made by naira would soon be reversed. So while speculators are buying up, foreigners are in the market to buy dollars at cheap rate, while those who have dollars have also decided to keep it, to forestall exchange rate lose.”
By DikeOnwuamaeze
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