Nigerian currency dealers refuse to show naira quotes after vow to crack down on speculators

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A gas station attendant displays a large bundle of naira banknotes after selling fuel to a customer in Port Harcourt, Nigeria, on Friday, Jan. 15, 2016. With his security forces engaged in fighting Boko Haram's Islamist insurgency in the north, President Muhammadu Buhari can't afford renewed rebellion in the delta. Photographer: George Osodi/Bloomberg

ABUJA, March 19  – Nigerian currency dealers are refusing to show quotes to sell the U.S. dollar after the central bank last week vowed to crack down on speculators in a bid to stop the naira from depreciating, traders said on Thursday.

The central bank last Thursday said it was collaborating with the Nigerian Financial Intelligence Unit (NFIU) to uncover speculation and would charge such dealers for economic sabotage. The bank added that market fundamentals did not support a devaluation.

The naira has been easing on the over-the-counter market on fears of a possible devaluation in the wake of an oil price collapse that has worsened dollar shortages in Africa’s biggest economy

The currency was quoted at 370 per dollar a week ago versus 366.5 two weeks earlier. On the black market the naira traded at 375 while it steadied at 307 on the official market supported by the central bank.

On Thursday traders were willing to buy dollars between 368 and 370 naira on the over-the-counter market but there were no sellers, they said, as liquidity was tight and traders were weighing central bank’s threat.

“I haven’t been able to buy dollars in the last two or three weeks, the market is tight,” one trader said.

JP Morgan analysts have said they expect the naira to be devalued by around 10% to 400 naira per dollar by the end of June.

Meanwhile Nigeria’s intelligence service has been asked to clamp down on money-changers and black-market currency dealers in a bid to defend the naira.

Dealers who trade at an exchange rate weaker than 400 naira per dollar face arrest and prosecution from the State Security Service, according to Aminu Gwadabe, president of the Association of Bureau de Change Operators of Nigeria. Foreign-exchange bureaus agreed to “to control the market so we will have sanity” and they have the “backing” of the central bank on the new rates, he said by phone from Lagos, the commercial center.

The naira strengthened to around 400 per dollar on the black market from 460 on Thursday, Gwadabe said.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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