The situation in the forex market remains unimpressive despite multiple effort of the monetary authority to stabilize the local currency. The Naira experienced a major decline in purchasing power at the official market as US dollar supply tracked below FX demand by eligible users in the autonomous market.
According to FMDQ platform which provides daily spot rates on currency traded at official window suggested that the naira was in a weaker position in the market as the exchange rate depreciated by 2.08% to N1,615.94 per US dollar.
Conversely, the gap between the official and parallel market rates is now at N28 as the exchange rate strengthened by 2.46% in the parallel market, closing at N1,588 per US dollar on Tuesday.
Since security agencies combative measures at the black market, the exchange rate has been improving. FX whales have gone underground having noted the authority will leave no stone unturned to save the local currency. Large US dollar holders have kept their hands tight on forex to keep the naira under pressure perpetually.
For years, Nigeria has not been able to meet eligible demand for foreign currencies due to the activities of speculators and insiders who continue to make extra ‘bucks’ from illicit currency trading.
The Central Bank recently fingered local banks for infractions, which later resulted in a directive to reduce lenders’ net open position drastically. It was gathered that banks were among those speculating against the naira, boosting the US dollar’s dominance in the market.
In its latest expose, the CBN said a large amount of untraceable FX inflows of more than $26 billion passed through Binance Nigeria. According to analysts, the amount is large enough to kill a local currency since it flows into an underground economy via peer-to-peer cryptocurrency exchange,