One year after the Central Bank of Nigeria (CBN) effectively criminalized Aboki FX’s actions and accused it of “economic sabotage,” the Naira has lost 25% of its value.
AbokiFX functioned as a benchmark by which everyone in Nigeria could calculate the price of the naira in the black market. The CBN frowned at the actions and accused the firm of currency manipulation at a time of rapid naira depreciation.
When Aboki FX stopped reporting forex rates on September 17, 2021, the Naira was trading around N570/$; one year later, the Naira had plummeted to around N710/$. This represents a 25% drop in one year.
Back story
- AbokiFX is a well-known website that previously published the parallel market exchange rate of the Naira against other currencies daily. Most forex traders are acquainted with the currency aggregating website to assist in determining the exchange rate rather than depending on BDC operators who occasionally give disparate pricing.
- This all changed when the Central Bank Governor, Godwin Emefiele, startled Nigerians at his monetary policy briefing on September 17th, 2021, by accusing AbokiFX of foreign currency manipulation, implying that it benefitted by setting black market rates that purposefully boosted the price.
- Mr Emefiele reiterated that their preliminary findings suggest that the website was built and is being used purely for the purpose of foreign exchange manipulation and speculations. “They get naira loans, use to purchase dollars, take a position, change the rate over a given period, sell the dollars they purchased and make a profit, this is completely illegal, unacceptable and we will pursue them,” he explained.
- The CBN Governor said, “It is economic sabotage and we will pursue him, wherever he is, we will report him to international security agencies, we will track him. Mr Oniwinde, we will find you, because we cannot allow you to continue to conduct an illegal activity that kills our economy.”
- Consequently, the website’s owner, Mr Olumide Oniwinde, issued a press release categorically refuting the claims and suspended the platform’s display of FX rates pending the settlement of the case.
- He said, “AbokiFX has taken the decision today, the 17th of September 2021, to temporarily suspend rate updates on all our platforms until we get better clarity of the situation.”
What AbokiFX is saying
In a recent tweet, AbokiFX sent a friendly reminder to the public suggesting they had no role in the free fall of the Naira despite the many accusations.
Aboki FX tweeted, “September 17, 2021. N570, September 17, 2022. N710. It’s been 366 days. -25%.”
“This time last year, we suspended rate publication to test the impact on the parallel market exchange rate. A further 25% decline has been recorded,” it added.
What you should know
- The Central Bank’s crackdown on the proprietor of AbokiFX was intended to protect the naira from a continuing wild collapse blamed on speculation.
- Therefore, it is worth noting that the black market saw temporary stability for about 3 weeks after AbokiFX stopped providing forex rates. Nonetheless, the success was fleeting, as the Naira is currently witnessing a double-digit decline one year later.
CBN and blame games
As long as the government does not understand that the only thing that can stabilise the Naira is the trust of depositors and investors in their government and policies. Currency control has never been the answer rather it encourages manipulation and speculation. Nigerians have billions of foreign currencies stashed in foreign banks that are used to develop the economies of countries and are lent back to the Nigerian government. I am sure so much Nigerian foreign deposits can be deposited in Nigerian banks If Nigeria is willing to remove totally currency controls and provides guarantees that it will not change this policy to guarantee that such policy is not a trap or a ploy to accuse their owners of past misdemeanors.