Nairametrics| The exchange rate closed on Thursday at a price of N400 on the black market. If you wanted to sell to black market operators, you’d probably be selling at any price between N380 t0 N395. The spread between buying and selling of the green back now more than N10. Some thing we last saw when the new exchange rate policy was introduced.
The widening gulf between the buy and sell disparity is a pattern that we rears its head whenever the market is panicking. It triggers a volatility to scares the pits out of currency speculators and even traders.
The current panic is being fed by the determined CBN on a mission to crash prices below N400 and burn speculators. As reported on this blog a few days ago, the CBN has been funneling dollars to commercial bank who are now complaining of a possible glut. There is not just enough retail buyers anymore according to some sources.
It appears that BDC operators are also fretting. Some of them believe that the N400 support will be breached this week and we may be heading for a price of N380 by Month’s end, if the CBN keeps “pumping” dollars. Critics of the CBN would also have you believe that they cannot sustain this on the long run. Soon, they will burn the reserves out and we may just be back to N600. These days, predictions like these are hedged with a “except they float” remark.
This market has proven unpredictable to say the least. How do you explain the fact that it has taken just over a month to bring the exchange rate to the lowest point since August 2016 in just one month? The unpredictable nature will continue to spook traders and speculators for weeks to come until it is quite clear how far the CBN can go.
For now, the gulf between buy and sell is an opportunity to make money for some traders and at the same time could swallow them into a pit of losses.