Naira to Dollar, risk Drops To N760/1$ On The Black Market
The naira appears to have lost its long-standing N750/ Dollar barrier as it sank below N760/$ Wednesday, four days before the inauguration of a new administration Naira has now depreciated so low with over 300% compared to the previous administration.
The uncertainty risk associated with a change in national economic management may have begun to be priced in by the market. Although they were unable to explain the unexpected increase, some dealers told The Guardian yesterday that the demand for foreign exchange (FX) has increased since the start of the week.
However, additional market information points to a return of high-value transactions to the black market. Sources connected the increase to the nation’s inaugurations taking place next week.
The Guardian, however, was unable to independently verify that the political community is behind the substantial amount of transactions. Before, former governors and MPs allegedly left the nation with illicit wealth as soon as their terms were up because of concern that they would be detained by anti-corruption authorities.
On Monday, President Muhammadu Buhari and the 44 ministries and entourage of aides who have been in government for the previous eight years will step down.
Beginning the following week, 18 governors throughout the nation will transfer the reins of their respective states’ political authority to their successors as they take the oath of office.
Days after the executive branch assumes power, the 36 parliaments and members of the National Assembly will also be sworn in.
The Economic and Financial Crimes Commission (EFCC) is keeping an eye on some of the departing public officials (some of whom are protected by the immunity clause).
The EFCC is reportedly evaluating petition dossiers, some of which may be politically motivated, according to a source with knowledge of specifics of some of the investigations, and some governors may have been under careful observation.
“Whether there are petitions is not a question but how many of them are viable? If you understand the number of public officials that are leaving office soon, you will be surprised that there is so much jittery in the political space,” the source said.
Newspapers are filled with charges and denials of fraud and theft of public funds dating back to the pre-election period. Various authorities have also participated in bogus initiatives that served as conduits for stealing public funds.
Naira to dollar exchange This is not the first time the naira has fallen out of favor before an inauguration.
Although the 2015 foreign currency rate crisis began before the general elections, it peaked just weeks before the Buhari administration took office, raising questions about the relationship between a lack of dollars and the end of an existing administration.
The naira was trading at N735/$ on Monday morning, but by day’s end, it had begun to weaken its grip.
As of the time of publication, it has lost over 4% week-to-date (WTD). With the exception of the increasing demand ease, the local currency is more vulnerable to decline.
The naira has been trading at a limited range, between 730 and 750 N/$, on the parallel market for more than six months, according to a previous story from The Guardian. This was roughly the longest period of time the local currency had gone without a significant movement.
The naira fluctuated widely until the end of the previous year, with each week establishing a new price range and the exchange rate changing three times during certain trading sessions.
When the currency crisis was at its worst, the dollar rose to N880/$. According to The Guardian, speculators had converted currency into a commodity while politicians were robbing the market to advance their political agendas.
However, as year-end drew near, the local currency became more stable, signaling the end of the significant volatility seen in recent years.
Since then, the currency has become more stable, trading about N730-750, which can be seen as an inflection point in the curve where a change in course is required.
