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Can naira recover from round-tripping over falling oil price?

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Activities at the nation’s foreign exchange market last week may continue to hold negative sway this week as Coronavirus-indicted oil price record low of $35 which further crashed dollar to N420 is still a global issue.

Recall that the Nigerian naira had crashed in value, as dollar sells for N420. Otherwise, since Thursday last week, the naira exchanged between N405 and N420 to a dollar in the Bureau De Change segment of the market.

In an interview weekend, the President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said the crude oil price which fell drastically in the international market to as low as $35 per barrel, raised speculations among the BDC operators and Nigerians in general.

According to him, market speculation did the main damage not that naira is so week a currency to collapse with such a speed.

Continuing, he argued that “With the fall in oil crude oil prices on Monday last week, we witnessed a lot of foreign investors’ portfolio dropping their assets, most especially to convert to cash.

“The movement was as a result of recklessness on the side of the operators, when they want to speculate, but there is no reason for such because the Central Bank of Nigeria had continued to maintain support for liquidity to the BDC sub-sector.”

However, he confided in our correspondent that even though some times last week, the dollar sold for as high as N400, sanity was gradually returning to the sector as it sold for N375 by the close of the day.

However, sources from the Central Bank of Nigeria (CBN) said the spike has been contained and that stability will continue to build up beginning from today, Monday, March 16, 2020.

Recall that the CBN had before weekend, expressed its displeasure on the issue in a statement, saying the speculative activities of unscrupulous players in the foreign exchange market was borne out of the impression that the CBN was on the verge of devaluing the Naira, and triggering panic in the FX Market.

“These rumours are false, unwarranted and calculated to serve their dubious and selfish ends,” it stated.

CBN averred that “We have begun a robust and coordinated investigation in collaboration with the Nigerian Financial Intelligence Unit and related agencies to uncover the unscrupulous persons and FX dealers who are creating this panic, and the full weight of our rules and regulations will be meted out to them, including, but not limited to, being charged for economic sabotage.”

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