LAGOS, Nigeria (VOICE OF NAIJA) – The recent reforms by The Central Bank of Nigeria to strengthen the naira have brought confusion among Abuja Bureau De Change operators, leading to uncertainty and volatility.
Traders in the parallel market are grappling with inconsistent pricing and cautious optimism as they navigate the implications of the CBN’s new policies.
A visit to Wuse Zone 4, a prominent foreign exchange hub in Abuja, paints a picture of confusion for potential buyers.
Dollar rates vary widely, ranging from N1,250/$ to as high as N1,330/$, creating uncertainty among buyers.
Despite differing rates, traders generally agree that holders of foreign currencies are adopting a cautious approach to selling, indicating a wait-and-see attitude as they assess the long-term impact of the CBN’s actions.
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There’s skepticism among traders regarding the potential for a significant drop in the dollar price in the near future. The CBN’s decision to sell $10,000 to Bureau De Change (BDC) operators at a rate of N1,200/$ with a 1.5% spread is met with doubt, with many questioning whether this will be enough to prompt a substantial downward movement in the parallel market.
The recent decision by the Monetary Policy Committee (MPC) to raise benchmark interest rates has further heightened tensions in the parallel market.
Traders anticipate an influx of portfolio investors attracted by the higher interest rates on Naira-denominated assets. This anticipated foreign exchange inflow could theoretically lead to a decrease in the dollar price, although the extent of its impact remains uncertain.
As the Abuja forex market grapples with these changes, market participants are closely monitoring exchange rates and adjusting their strategies in response to the evolving landscape. The combined effects of the CBN’s policy adjustments are yet to be fully understood, and the market is bracing for further developments in the days and weeks ahead.