Nigeria Cracks Down on Forex Hoarders to Stem Naira Crash

Nigeria’s anti-graft agency said it would arrest foreign currency traders found to be hoarding the dollar after a plunge in the country’s currency last month.

To end brazen speculations

The Economic and Financial Crimes Commission called foreign exchange dealers to a meeting in a bid to end “brazen foreign exchange speculation” that’s causing “a run on the value of the naira,” the agency said. It has intelligence linking some persons and organizations to the hoarding of foreign currencies, it said.

It warned “those involved to desist or risk arrest as a major offensive against the speculators is under way.”

Africa’s largest economy has been rationing dollars following the drop in income from oil which accounts for about 90% of its foreign exchange earnings. The nation also suffers theft of crude oil and uses petroleum revenue to subsidize gasoline prices. The shortage of dollars at the banks is forcing many individuals and businesses to access them on the black market.

Changing money on the street

For people changing money on the street, the nation’s currency has strengthened in recent days, at least partly due to increased surveillance from the authorities.

The nation’s currency strengthened on the unofficial market on Friday to 660 naira a dollar after weakening to a record 710 naira last month, according to Abubakar Mohammed, an operator of a bureau de change that tracks the data in the commercial capital, Lagos.

“Speculators are realizing that the EFCC are coming after them and as a result decided to dump their dollars,” he said by phone.

The country’s foreign-exchange reserves have dropped 3.5% this year to $39.1 billion. Besides demand management of the available foreign currency, the Central Bank of Nigeria operates a tightly controlled official exchange rate to halt a rout of the local unit. The official naira rate is currently about 424.04 a dollar.