FOREX CRISIS: TRADERS LOSE MONEY AS THE NAIRA STRENGTHENS TO 720 TO THE DOLLAR

The naira has recovered by 20.8% to 720/dollar on the black market.

The change occurred two weeks after the local currency experienced intense pressure on the underground market as a result of the Federal Government's announcement to redesign the naira.

Last weekend saw the naira plunge to an all-time low of 910/dollar against the US dollar after falling last week.

However, the currency started to strengthen against the dollar on Monday following a week-long crackdown on foreign exchange dealers by EFCC personnel in Abuja, Lagos, Kano.

Over 90 Bureau De Change employees had been detained by EFCC agents across the nation's major cities on suspicion of currency hoarding and helping politically exposed Nigerians and other criminal elements in money laundering.

After the Federal Government decided to restructure the local currency, the naira, which was bought and exchanged on the streets of Lagos and Abuja between 735 and 745 per dollar around two weeks ago, went into free fall.

Speaking to our correspondents, forex dealers explained that the EFCC's operations and market mood were to blame for the situation.

Many BDCs were allegedly driven into hiding as a result of the crackdown on forex dealers, which reportedly caused many currency speculators to hold back on their demand for the dollar.

Mustafa Abdullahi, a BDC operator at the Murtala Muhammed Airport in Lagos, revealed to our reporters on Thursday that he purchased local currency for 715 dollars per dollar and sold it for 720 dollars per dollar.

Following the EFCC crackdown, a number of BDCs had disappeared, and demand for the dollar had sharply decreased.

Many of our people have suffered significant financial losses as a result of the decline. When the dollar was worth more than N800, many of them bought it. They are losing millions of dollars now that the value of the US dollar has started to decline. Millions of naira were lost by me personally.

A second BDC employee at the Lagos airport, Seriki Muhammed, claimed to have purchased and sold dollars on Tuesday for 717 and 721, respectively.

According to Muhammed, several BDCs were licking their wounds because they had purchased more than $500,000 at a price of around 820 per dollar in expectation of more declines in the value of the naira. Unless the dollar increases once more, we are in serious trouble.

Gambo Bello, a local currency trader in Allen Avenue in Ikeja, Lagos, claimed to buy and sell US dollars for N715 and N720.

According to Abubakar Hamid, a BDC operator in Abuja, he purchased the US dollar for N716 and sold it for N719 to one of our correspondents.

Zakari Mohammed, a BDC operator in Lagos Island, that he was buying and selling at N718 and N722 per dollar.

The news of the redesigned naira, according to Aminu Gwadabe, President of the Association of BDC Operators of Nigeria, drove the market in the previous two weeks.

He said that several currency speculators had lost millions of naira due to the naira's recovery. Many forex dealers were unaware that the naira would recover too quickly.

I can claim that the market was impacted by the EFCC's surveillance as well as other considerations, he added. However, in addition to the local problems in Nigeria, I can claim that some global variables also had an impact on the market. Remember that nations like Saudi Arabia, Russia, and China are making decisions that are now impacting the dollar's dominance.

However, locally, certain attitudes caused the naira to rebound and these attitudes made people to lose millions of naira. Many people bought cash at N800/dollar and are now concerned that the rate has dropped to N720/dollar.

This is what caused some resistance in the market, as many BDCs were averse to selling their dollars for less. Due to certain market attitudes, people who retained their dollars are suddenly using them.

Following the unveiling of the redesigned naira, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, observed a decrease in the rush for dollars.

He believed that the naira's resurgence may have been caused by this drop.

It's a really unstable position, he continued. That declaration immediately caused some people to rush to switch to dollars. Already, the initial wave of emotion is starting to subside. That may play a role. It's possible that the pressure on the dollar will lessen once the initial rush has passed.

The recent rumor about certain dollar bills expiring played a role in the naira's recovery.

Yusuf pointed out that the situation was still unstable and that there were still a lot of unknowns.

He added that it is unlikely that the recent arrest of a few BDC operators contributed to the comeback.

Yusuf said that it was possible that some investors were cautious and aware of the unstable environment, which may have protected them from suffering losses.

But he added that when one speculates, one can sometimes lose and sometimes win.

Dr. Aliyu Ilias, a development economist, observed that the naira might continue to fall, particularly with the upcoming election.

Additionally, he noted that the economy wasn't yet stable and that the recovery might not persist for very long.