In a bid to halt the steep decline of the naira, Nigeria has taken decisive action against foreign currency street traders and a prominent crypto trading platform.
The unofficial market witnessed a sharp drop in the value of the naira this week, reaching 1,900 to the dollar at one point on Thursday. This widening gap between the unofficial and official rates of the naira has posed challenges for government efforts to unify the two.
The depreciation of the currency follows months of decline since President Bola Tinubu relaxed Nigeria’s foreign exchange regime to attract much-needed foreign investment. Since the relaxation of the currency peg in June, the naira has lost approximately 70% of its value against the dollar.
Despite hopes for increased US currency inflows, the anticipated liquidity in local dollars has been slow to materialize. Consequently, the scarcity of local dollar liquidity has led to significant fluctuations in the street value of the naira.
As a result, authorities have turned their attention to forex street traders, with anti-graft officers conducting numerous arrests in Lagos and other parts of the country. Aminu Gwadabe, president of the Association of Bureaux de Change Operators of Nigeria, confirmed the arrests, clarifying that those apprehended were unlicensed operators.
Additionally, the Economic and Financial Crimes Commission had previously announced plans to establish a task force to address the mishandling of the naira and the dollarization of the economy.
In a separate development, a presidential spokesperson accused the crypto trading platform Binance of manipulating the naira. The spokesperson confirmed reports that access to Binance had been restricted for some users in Nigeria. Binance, in response, acknowledged on Thursday that certain Nigerian users were encountering difficulties accessing its website.
Many young Nigerians utilize the cost of a USDT token in naira on the Binance platform as an indicator of the naira’s exchange rate against the dollar.