The naira has dropped to a new low of N885 per dollar at the parallel section of the foreign exchange (FOREX) market, popularly called the black market.
The figure represents a depreciation of N70 or 8.6 percent from the N815 it traded last week.
Speaking to TheCable on Monday, some Bureaux De Change (BDC) operators said dollar demand has been swelling and putting pressure on the naira.
They put the buying price of the dollar at N860 and the selling price at N885, leaving a N25 profit margin.
“We are selling one dollar for N885 for now. But the price is gradually coming down,” a currency trader in the Ikeja area of Lagos, said.
At the official market, the naira appreciated by 0.06 percent to close at N445.50 on Friday, according to details on FMDQ OTC Securities Exchange — a platform that oversees official foreign-exchange trading in Nigeria.
The decline of the naira against the greenback at the parallel market intensified sharply after the Central Bank of Nigeria (CBN) announced its plan to redesign the nation’s currency.
At the time the CBN announced the currency redesign, the naira traded at N785 per dollar.
Last week, the Economic and Financial Crimes Commission (EFCC) commenced raids on forex trading hubs in Abuja, Lagos and Kano in an effort to halt the slide of the naira against the dollar.
The agency is said to be concerned that money launderers have been obtaining forex from BDCs in order to avoid losing their ill-gotten naira which faces redesign by the government.
Speaking to journalists on the raids, Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), said the clampdown is mostly targeted at forex dealers hawking on the streets, which according to him, are not licensed BDC operators.
“The emphasis of the EFCC is on traceability of funds and protecting your business against money laundering. As a BDC operator, you need to comply with these,” he said.
“As a BDC operator, you should also have an office. Regulators and security agencies can enter your office without any warrant. Hawking of forex on the streets is an infraction. The only problem is when you don’t comply with these rules and you are caught.”
Gwadabe also said the currency redesign has increased volatility in the FOREX market.
“When the local currency is losing value, people want to move to another currency that is stable. This necessitated currency conversion which leads to hoarding. These activities have continued to mount pressure on the naira,” the ABCON boss explained.
“The spike we are experiencing is artificial. It’s not an effective rate. It is caused by lack of liquidity in the market.”