Nigerian currency traders are refusing to show rates to sell the U.S. dollar after the Central Bank of Nigeria (CBN) last week vowed to crack down on speculators in a bid to stop the Naira from depreciating, traders said yesterday.
The CBN recently announced it was collaborating with the Nigerian Financial Intelligence Unit (NFIU) to uncover speculation and would charge such dealers for economic sabotage. The bank added that market fundamentals did not support devaluation.
The Naira has been easing on the over-the-counter market on fears of a possible devaluation in the wake of an oil price collapse that has worsened dollar shortages in Africa’s biggest economy.
The currency was quoted at N370 per dollar a week ago versus N366.5 two weeks earlier. On the black market, the Naira traded at 375 while it steadied at 307 on the official market supported by the CBN.
Traders were willing to buy dollars between N368 and N370 on the OTC Market but there were no sellers, as liquidity was tight and traders were weighing CBN’s threat.
JP Morgan Chase analysts have said they expect the Naira to be devalued by around 10% to 400 Naira per dollar by the end of June.
Meanwhile, Nigeria’s intelligence service has been asked to clamp down on money-changers and black-market currency dealers in a bid to defend the Naira.
Dealers, who trade at an exchange rate weaker than N400 per dollar, face arrest and prosecution from the State Security Service, according to Aminu Gwadabe, President of the Association of Bureau de Change Operators of Nigeria. Foreign-exchange bureau agreed “to control the market so we will have sanity” and they have the “backing” of the central bank on the new rates, he said by phone from Lagos, the commercial centre.
The Naira strengthened to around N400 per dollar on the black market from 460 on Thursday.