Naira Strengthens To N310 Against The Dollar

The Naira has been on a free fall in the last two weeks dropping to an all time low and on Monday it sold around N375 to a dollar. The currency has however mounted a ‘comeback’, rising by 17.3% to N310 to one dollar at the close of business on Tuesday...YIPEEEEE*Dancing*

There had been concerns that the drop in Nigeria’s currency was set to continue with speculators stating it might fall as low as N450-N500/$ this week. Those speculators have however been proven wrong as the naira defied expectations, climbing to as high as N305 to the dollar at some parallel market points in Lagos on Tuesday afternoon, before settling at N310.

The so-called speculators who thought their attack on the Nigerian currency would compel the central bank and President Muhammadu Buhari to alter their stance against the devaluation of the currency, were however disappointed when Buhari, adamantly ruled out the devaluation of the naira on the grounds that Nigeria does not have the competitive advantage to benefit from an official currency adjustment. This led speculators who had been betting further depreciation of Nigeria’s currency, to start dumping the dollar with reckless abandon, effectively creating excess supply of the greenback in the parallel market.

An analyst at Ecobank Nigeria, Mr. Kunle Ezun, predicted that the naira would edge higher in the coming days: “We expect that the naira would appreciate further. We have always said that what happened last week was purely a speculative attack. Some people felt that if they pushed the naira down to that level, they could force the CBN to devalue, so that when the naira is devalued and the gap widens further, they would now bring out the dollar cash to make a kill.”

-Vanguard