Kelvin Bowoto
The value of the naira increased in the Nigeria Autonomous Foreign Exchange Market (NAFEM) yesterday as the government began to take steps to save the currency after it depreciated at the official market the day before.
At the end of trading activity at the market, commonly known as the Investors’ and Exporters’ window (I&E), the naira had risen by 2.9%, finishing at N1,551.24 to the dollar, up from N1,598.54 at the market’s official closure on Monday.
This comes as the Office of the National Security Adviser (ONSA) and the Central Bank of Nigeria (CBN) have joined forces to crack down on forex speculators across the country in order to address the issues threatening the country’s economic stability.
The market’s inflows increased from $68 million on Monday to $117.32 million after the close of business on Tuesday. In intraday trading, the naira traded as low as N1,701 to the dollar and as high as N1,100.
The FX crisis has caused economic suffering in recent times, inciting protests around the country as citizens are unable to afford basic necessities.
The CBN and the government are seeking to limit the actions of market speculators.
Last week, the naira depreciated by 4.4% versus the dollar at the official end of the market, closing at N1,537.96, while it concluded trading at the parallel market at N1,625 to the dollar, a 9.5% devaluation from where it began last week.
Meanwhile, the head of strategic communication at ONSA, Zakari Mijinyawa, stated that the cooperation sought to protect Nigeria’s foreign exchange market and prevent speculative actions.
“This collaboration will involve a coordinated effort with key law enforcement agencies, such as the Nigeria Police Force (NPF), the Economic and Financial Crimes Commission (EFCC), the Nigeria Customs Service, and the Nigeria Financial Intelligence Unit.”
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“The major goal of this coalition is to systematically identify, properly investigate, and adequately sanction people and organizations involved in illegal activity in the FX market.
“By leveraging these agencies’ expertise, we hope to deter malicious practices, protect investor interests, and promote long-term economic growth.”
“This collaborative effort demonstrates the Nigerian government’s commitment to improving its Anti-Money Laundering and Counter-Terrorism (AML/CFT) framework and getting off the Financial Action Task Force’s gray list.
Furthermore, the initiatives will help provide a stable and transparent foreign exchange market, boost investor trust, and advance the nation’s economic well-being,” Mijinyawa remarked.
He praised the CBN’s proactive actions to stabilize the foreign currency market and boost economic activity.
However, he stated that the efficiency of such attempts is being undercut by the activities of speculators “both domestic and international, operating through various channels, thereby exacerbating the depreciation of the Nigerian naira and contributing to inflation and economic instability.”
He also recalled that, in order to address exchange rate volatility, the CBN launched a comprehensive strategy to improve forex market liquidity, which included unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau de Change (BDC) operators, enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility cap.
The EFCC has also formed a 7,000-man special task force across its 14 zonal commands to crack down on dollar racketeers in order to relieve strain.
“Yet, recent intelligence reports have highlighted continued illicit activities within the Nigerian foreign exchange market; the ONSA and CBN are therefore embarking on this collaborative approach to tackle these infractions,” he said.
Techrectory with Agency Report.
