In the foreign exchange market, the value of the naira recovered as demand outpaced supply of foreign currency at Nigeria’s independent FX market. At the official market, the naira closed at ₦1,572.86 per US dollar, up 1.86% against the dollar. Due to this, the difference between official and parallel market rates has grown to N23, while parallel market rates have decreased.
The lack of a central bank to affect the direction of the exchange rate has reduced the rate of movement to the positive side. Nigeria is refusing to back down in the face of significant forex that went through Binance. Because of the strong demand for US dollars, influential traders experienced a run on foreign exchange.
The FMDQ platform said that the spot rate increased to $1572, trading below the $1560 mark for the first time in March amidst expectations that the local currency will recover from excessive weight loss.
The Central Bank is looking to obtain information about top traders on the Binance crypto peer-to-peer platform. The court has granted a request that Binance who has been under surveillance to make available the list of its top customers in Nigeria for perusal.
These FX whales may face prosecution if found wanting in the shadow economic game that plunged the naira into trouble. The apex bank claimed that Binance became a conduit where some Nigerians converted local currency to US dollars for trades that failed to pass through the financial system.
The CBN estimated that more than $26 billion was transmitted via the peer-to-peer platform in one year, causing demand for the US dollar to rise faster amidst excess cash in the system.
To reduce cash levels in the economy, the apex bank embarked on aggressive mopping up with large ticket treasury and open market operations bills sales that attracted both local and foreign investors. The increase in short term borrowing instrument sales comes with higher interest rates offered to market participants who parted with naira for papers.
But despite all the efforts to achieve market clearing rates, the naira has been moving range bound. Traded above #1600 is against market expectations, analysts said in chats with MarketForces Africa.
Since the naira was floated, the CBN market intervention has reduced significantly, far below the pre-pandemic support level to boost FX liquidity at the official window. For the exchange rate to recoup losses sustained due to spurious demand, analysts said there is a need to ensure there is enough FX market supply.
“The naira is under pressure because the demand and supply side are not balanced. If there are more US dollars at the official window than what is needed to pay offshore bills, the exchange rate will bounce back,” analysts said.
The Federal High Court sitting in Abuja has ordered Binance Holdings Limited to release to the Economic and Financial Crimes Commission, EFCC, a comprehensive detail of all persons from Nigeria trading on its platform.
Binance is a cryptocurrency exchange platform that lists more than 350 digital currencies, which serve as alternative forms of payment, using encryption algorithms. The government had earlier asked Binance for information on its top 100 users in the country, as well as all transaction history for the past six months.
At the official window, the naira appreciated by 1.86%, closing at ₦1,572.86 per US dollar at the official market. In the parallel market, the naira closed at ₦1,595 to the US dollar. Exchange rate at the space has been uptrend but now reversing due to unsettle conditions in the official window.
Nigeria is seeking unified exchnage rates and the apex bank has pledged to sell $20,000 to Bureau de Change operators after the authority has delisted more than 4000 for various regulatory breaches.
In the global commodity market, the cost of oil saw an uptick, as Brent crude elevated by 0.62% to attain $85.87 per barrel, while WTI crude similarly climbed by 0.62%, reaching $81.55 per barrel.
