Currency traders, under the Association of Bureau de Change Operators of Nigeria (ABCON), warn that speculators are resisting the sharp appreciation of the naira to offset their mounting losses. They call on the Central Bank of Nigeria (CBN) to sustain its efforts to clamp down on illegal forex speculation and currency substitution.
The naira continues to strengthen in both official and parallel markets, spurred by the introduction of the Enhanced Foreign Exchange Market System (EFEMS). The currency has appreciated for three consecutive days, leaving speculators scrambling to mitigate their losses as the local currency outpaces their trading strategies.
Aminu Gwadebe, ABCON President, highlights the current forex market dynamics. “Demand is unusually weak, while supply is overwhelming. This imbalance is putting immense pressure on speculators. However, we foresee resistance from these players as they attempt to cover their losses,” he explains.
Gwadebe urges the CBN to maintain its strong interventions and ensure market stability by engaging Bureau de Change (BDC) operators where volatility persists. “The CBN must sustain this momentum, prevent illegal practices, and promote greater transparency in the market,” he says.
He also assures that the apex bank has sufficient foreign exchange liquidity to maintain its grip on the market. “The CBN has ample inflows from multiple sources to control the market effectively. EFEMS should encourage real-time rate transparency, where all players can openly display their buying and selling prices to enhance accountability,” Gwadebe adds.
Launched on December 2, 2024, EFEMS simplifies foreign exchange trading by addressing market inefficiencies and improving transparency. The platform unifies all forex windows into a centralized system, enabling seamless trade monitoring and price discovery.
Gwadebe acknowledges initial concerns about EFEMS but commends its positive impact. “This platform has introduced clarity and boosted confidence in the market. We remain committed to supporting the naira’s appreciation, as it benefits both businesses and the overall economy,” he affirms.
The current dynamics, including limited naira cash availability, have reduced naira-to-dollar substitution and contributed to the currency’s gains. Increased public confidence in the CBN’s monetary policies further strengthens the naira’s position.
The CBN recently rolled out new guidelines for Nigeria’s foreign exchange market, consolidating all forex windows into a unified framework. These reforms aim to address inefficiencies and improve regulatory oversight.
Licensed BDC operators are now allowed to purchase forex directly from authorized dealers, enabling them to play a more significant role in meeting retail forex demand. These changes align with the CBN’s strategy to streamline the forex market and ensure the naira accurately reflects its value.
These reforms mark a significant step toward creating a transparent and well-regulated forex system that fosters economic stability while curbing speculative activities.
, warn that speculators are resisting the sharp appreciation of the naira to offset their mounting losses. They call on the Central Bank of Nigeria (CBN) to sustain its efforts to clamp down on illegal forex speculation and currency substitution.){kind=link}