On the black market, the naira maintained its position and gained value in relation to the dollar while the dollar index experienced modest declines due to profit-taking.
The black market value of the naira on Thursday was N1,510/$1, but on Friday it was valued at N1,500.
Friday’s closing value of the naira on the Nigerian Autonomous Foreign Exchange Market (NAFEM) was N1,482.8, up from N1,485.7 on Thursday.
Conflict over street trading
To counteract speculation against the weak naira, the Economic and Financial Crimes Commission (EFCC) has stepped up its efforts by passing stricter new regulations on Bureau de Change (BDC) and foreign exchange transactions on the black market.
As part of their continuous assault on street dealing, EFCC agents recently detained illegal currency dealers in Abuja, Lagos, Kano, and Port Harcourt. More than 300 accounts linked to illicit foreign exchange trading have already been suspended by the EFCC.
In an effort to lessen currency trading manipulations online, the Securities and Exchange Commission (SEC), the nation’s financial authority, intends to collaborate with the EFCC. Blaise Ijebor, chief of risk management at the CBN, says dealing foreign exchange on the street is not allowed.
With the justification that the industry needs to be regulated to make sure the value of the naira isn’t being undermined, the CBN dramatically raised the capital requirements for the country’s BDCs.
Tier one BDCs operating across the country now need N2 billion in capital, up from N35 million, while tier two BDCs operating in a single state now need N500 million. These increases were made by the apex bank. The industry has six months to get on board.
The BDC umbrella group has asked the authorities to postpone and lower the new benchmarks.
As part of a bigger crackdown on cryptocurrency platforms, which they believe are worsening the volatility of the local currency, the Federal Government announced plans to make it illegal for individuals to trade cryptocurrencies with one another in naira. This action comes after that declaration.
Since Nigeria’s foreign exchange market was liberalised last year, the value of the naira has decreased by more than two thirds relative to the dollar.
United States dollar index postings Friday losses, but the week concludes on a high
The US dollar was still in a strong position to increase further because of positive U.S. economic data that encouraged markets to lower their expectations for interest rate reductions. The haven currency fell versus major currencies on Friday as investors booked profits after recent gains.
According to data released on Friday, the amount of critical capital goods manufactured and shipped from the United States increased dramatically in April, above forecasts and suggesting a potential increase in spending on business equipment in the first half of the second quarter.
This came after data on Thursday showed that US business activity in May reached its highest point in little more than two years and that US manufacturers were reporting higher input costs.
The minutes of the Federal Reserve’s most recent meeting were made public this week, and they showed that policymakers were sharply divided about whether the current interest rate environment was restrictive enough to prevent inflation.
The dollar index witnessed a 0.3 percent dip on Friday after seeing advances for five straight trading sessions, closing at 104 index points versus a basket of key currencies. On the other hand, for the entire week, the dollar index rose by 0.2 percent.
