EFCC broadens crackdown on Bureau De Change traders across Abuja, Lagos, Kano, and Port Harcourt as the naira weakens against the dollar. Recent raids follow government efforts to address the naira’s decline, with previous arrests in Abuja for alleged speculation against the currency.
Operations disrupted market activities, prompting caution among traders nationwide. Traders report naira rates at N1,520/$ and 1,540/$. EFCC raids primarily targeted street traders but also impacted registered BDC operators. Despite government action, the naira closed at N1,540/$ in the parallel market, representing a 4.05% depreciation from Monday.
The official FX market witnessed a 3.04% depreciation, with the dollar quoted at N1,520 on Tuesday. This decline is attributed to a dollar shortage caused by foreign portfolio investor fund repatriation.
The Central Bank of Nigeria’s interventions aimed at reducing speculation on the naira resulted in temporary stability. These measures included prohibiting Foreign Currency Collaterals for Naira Loans and aligning exchange rates of International Money Transfer Operators with prevailing market rates. In February 2023, under Yemi Cardoso’s leadership, the CBN implemented the first interest rate hike, raising the MPR by 400 basis points to 22.75%.
This was followed by another increase in March, raising the MPR by 200 basis points to 24.75%. These rate hikes coincided with a strengthening of the naira, appreciating to as high as N1,150/$1. However, economist Faith Iyoha from the Nigerian Economist Summit Group highlighted that despite these reforms, the naira remained volatile due to the absence of fundamental FX liquidity policies.
She emphasized the need for increased FX liquidity through exports and foreign capital inflow to strengthen the naira. Faith stressed the importance of improving non-oil exports and creating macroeconomic stability to attract foreign capital.
She noted that policy uncertainty and instability deterred investors, leading to capital outflows. Faith concluded that sustaining naira strength required enhancing FX inflows through trade and creating a conducive macroeconomic environment.