Economy
EXPLAINER: Real Reason for the Recent Sudden Rise in Naira to Dollar Rate at P2P
By Dipo Olowookere
On Friday, a few cryptocurrency exchange platforms like Kucoin, Bybit and others were in the news, especially on X, formerly known as Twitter, where they trended as a result of a sharp rise in the Naira to Dollar exchange rate.
Some persons were scared that the gains recorded recently by the Naira may begin to erode and began to call for the heads of these platforms like Binance, which was forced to stop its operations in Nigeria because of allegations of currency manipulation.
The company, Binance, and two of its employees have still not been cleared of the issues they have with the Nigerian government, which has arraigned them before a federal high court.
Yesterday, many claimed that some forex manipulators have rushed to the other crypto exchange apps to begin to fight back, blaming them for the recent fall in the value of the Naira in the parallel market.
Business Post reports that while the Nigerian Naira has witnessed a decline in its value against the US Dollar, not much has happened in the black market.
Though on Friday, the Naira lost 1.4 per cent or N15.91 to trade at N1,169.99/$1 compared with the previous day’s rate of N1.154.08/$1, and in the parallel market, it weakened by N30 against the Dollar to quote at N1,150/$1, in contrast to the preceding day’s exchange rate of N1,120/$1.
As earlier stated, the decline in the local currency was blamed on the trading of cryptocurrencies by some people, but this is entirely not true.
“You claimed that the Naira’s fall has nothing to do with trading cryptocurrencies, but the Naira has appreciated from N1,900 to N950 to the Dollar since FG banned Binance.
“Oga NSA (National Security Adviser Nuhu Ribadu), what you did for Binance, do for Bybit, Kucoin, and OKX; they moved from Binance to these platforms,” one of the commenters wrote.
Another wrote, “Since Wednesday, the Dollar has started to increase again at BDC. Here is why, the emergency lovers of Binance are back speculating on other P2P (peer-to-peer). They will keep adding N50, N50 every day until they take it back to N2,500, which was their initial plan and recoup their loss. CBN (Central Bank of Nigeria) act now.”
“On this issue, I reached out to a source in the relevant security agency and I was reliably informed that it has been flagged as imminent danger and it’s being looked into.
“I am told that they (security agency) may have to expend their hands to them, just like they did to Binance.
“I am told that the NSA (Nuhu Ribadu) has a keen interest in currency manipulation activities as a means of economic sabotage. This is all I am allowed to say for now,” another stated.
However, Business Post can say that the recent weakening of the Naira may have not been entirely caused by manipulators.
For those in the crypto landscape, who trade digital currencies with USDT, which is pegged at the Dollar rate, the recent rise in the value of the US currency against its Nigerian counterpart may have been caused by the Bitcoin halving, which happened on Friday.
Yesterday, Bitcoin (BTC), which is the world’s largest cryptocurrency, completed its fourth ever “halving,” a phenomenon that happens roughly every four years.
It is always anticipated that the value of this digital coin will increase after the halving and the quest to be part of it triggered the demand for USDT and the rise in the exchange rate at these cryptocurrency exchange platforms.
Crypto traders in Nigeria on these platforms had to cough out more Naira to buy the USDT, which was already in high demand because of the BTC halving.
Now that the process has ended, you should expect to see a downward trend in the price of USDT or Dollar in the P2P market in the coming days.
For further clarification, please hit the comment section below.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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