Naira Scales as Nigeria Seeks Details About Shadow FX Whales
Naira Notes

The naira reclaimed value in the forex market as demand undercut foreign currency supplied at Nigeria’s autonomous FX market. The naira appreciated by 1.86%, closing at ₦1,572.86 per us dollar at the official market. This has widened the gap between official and parallel market rates to N23 as parallel market rates declined.

The exchange rate movement to the positive side has been slowed due to the absence of the central bank to influence the exchange rate direction. Nigeria is not giving up without a fight on large forex that passed through Binance. Influenced traders had had a run on foreign exchange due to steep demand for US dollars.

According to information from the FMDQ platform, the spot rate appreciated to #1572, trading below the #1600 range for the first time in March amidst expectations that the local currency will recover from excessive weight loss.

The Central Bank is looking to obtain information about top traders on the Binance crypto peer-to-peer platform.  The court has granted a request that Binance who has been under surveillance to make available the list of its top customers in Nigeria for perusal.

These FX whales may face prosecution if found wanting in the shadow economic game that plunged the naira into trouble.  The apex bank claimed that Binance became a conduit where some Nigerians converted local currency to US dollars for trades that failed to pass through the financial system.

The CBN estimated that more than $26 billion was transmitted via the peer-to-peer platform in one year, causing demand for the US dollar to rise faster amidst excess cash in the system.

To reduce cash levels in the economy, the apex bank embarked on aggressive mopping up with large ticket treasury and open market operations bills sales that attracted both local and foreign investors. The increase in short term borrowing instrument sales comes with higher interest rates offered to market participants who parted with naira for papers.

But despite all the efforts to achieve market clearing rates, the naira has been moving range bound. Traded above #1600 is against market expectations, analysts said in chats with MarketForces Africa.

Since the naira was floated, the CBN market intervention has reduced significantly, far below the pre-pandemic support level to boost FX liquidity at the official window. For the exchange rate to recoup losses sustained due to spurious demand, analysts said there is a need to ensure there is enough FX market supply.

“The naira is under pressure because the demand and supply side are not balanced. If there are more US dollars at the official window than what is needed to pay offshore bills, the exchange rate will bounce back,” analysts said.

The Federal High Court sitting in Abuja has ordered Binance Holdings Limited to release to the Economic and Financial Crimes Commission, EFCC, a comprehensive detail of all persons from Nigeria trading on its platform.

Binance is a cryptocurrency exchange platform that lists more than 350 digital currencies, which serve as alternative forms of payment, using encryption algorithms.

The government had earlier asked Binance for information on its top 100 users in the country, as well as all transaction history for the past six months. Analysts said large local currency converted to US dollar to load trading accounts on Binance is significant enough to drag the naira.

At the official window, the naira appreciated by 1.86%, closing at ₦1,572.86 per US dollar at the official market. In the parallel market, the naira closed at ₦1,595 to the US dollar. Exchange rate at the space has been uptrend but now reversing due to unsettle conditions in the official window.

Nigeria is seeking unified exchnage rates and the apex bank has pledged to sell $20,000 to Bureau de Change operators after the authority has delisted more than 4000 for various regulatory breaches.

In the global commodity market, the cost of oil saw an uptick, as Brent crude elevated by 0.62% to attain $85.87 per barrel, while WTI crude similarly climbed by 0.62%, reaching $81.55 per barrel. #Naira Scales as Nigeria Seeks Details About Shadow FX Whales Naira Suffers Big, CBN Goes Ballistic Against FX Whales

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