The national currency, the Naira, has rebounded slightly after its seeming freefall.
1st News reports that the development comes as the Association of Bureaux de Change Operators of Nigeria formally asked its members to stop hoarding their stock of dollars.
The move is an attempt to bridge the existing spot and illegal market prices. Consequently, the naira appeared to rally after slipping to a four-year low of 505 a dollar on Monday. Bloomberg reports that the local currency gained 0.6% to 490 on Friday in the unauthorized market; as seen on abokifx.com, a website that collates the data. Further, the naira opened at 411.58 a dollar on the NAFEX window.
Equally important, the NAFEX window is used as the official rate by the Central Bank of Nigeria.
The development comes as a piece of good news after the naira appeared to be on a seemingly unstoppable slide.
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In a text message to members of the association, Aminu Gwadabe, president of the Association of Bureaux de Change Operators of Nigeria, prevailed on members to release their stock of dollars. Further, he warned that officials of the association have been deployed nationwide to check the menace.
“We advise, and warn our members in particular, and the public to desist from any behavior of speculation and hoarding. Such actions will definitely lead to a very big collateral loss,’’ he said.
Bloomberg says the CBN sells $10,000 each to over 5,000 dealers twice a week at 393 naira. Thereafter, the dealers are asked to sell to customers at 395 naira; leaving them with a 90 naira discount to the street rate.
However, the development has created opportunities for arbitrage and other profiteering rackets.
Nigeria is currently battling a spiralling inflation rate in addition to reduced earnings from crude oil, the mainstay of its mono-econnomy.