I've been trying my hands on a little bit of trading lately, and it's been mostly positive. I apply the crudest trading technique known to man and it has mostly worked in my favour in recent times; buy low, sell high.
Binance announced some weeks ago that Naira would be added to their system and I have been trading against BUSD, basically Dollar but Binance based I guess? That's irrelevant.
The point is, I've been trading, and things were sort of going good for me. I bought into the market when $1 was trading for 380 and after a few hours, the shit spiked to 420, of which I sold and made like 2,000 Naira profit. I don't have that many dollars.
I got so excited and bought a dollar at 410 that went fast and placed a sell order at 450 Naira. That order hasn't been filled until this very moment, and it's all the Central Bank's fault.
According to excerpts from the statement released by Central bank I found on Nairametrics, The CBN insists there's no threat of devaluation and of course played the blame game by claiming;
unscrupulous players in the foreign exchange market" for spreading the rumour.
The unscrupulous players got slapped with 5 million Naira fines, for their rumour mongering but that's some bullshit I'm not buying, but let's pretend I do for the sake of this post.
The Central bank claims we have a "robust" Foreign reserve that's slightly above 2x the market cap of Ethereum($25 billion to $30 billion range, according to CNBC.
In the same CNBC the trade war between Russia and Saudi Arabia that's kicking everybody's nuts hasn't even really begun, yet oil prices have dropped to as low as $30-$33 range, according to oil price. According to the post;
The International Monetary Fund (IMF) on Thursday said it would be working closely with the Nigerian authorities in the coming days to assess any vulnerabilities which may be exposed by the sharp decline in crude prices, as Nigerian and Angolan dollar bonds sank to record lows.
Okay, that's not very reassuring. The Central Bank did say they will not Devalue the Naira but with a caveat;
The statement went further to categorically state that the Central Bank of Nigeria has not devalued the Naira. It will not do so in the meantime, because market fundamentals do not support such a move.
So in essence, once market fundamentals(demand and supply?) support a "move", Naira goes to the shitter. Well considering how horrible this regime has been with the economy, surely it is not out of the question to expect a substantial dump in the price.
For now, the Central Bank's bullish overtures had a positive effect on Naira but with the rest of the world and most importantly, our sugar daddies all tumbling into hysteria because of Coronavirus, I wonder how long the fundamentals will keep us from devaluation.
Disclaimer; This is not financial advice, please do your own research before making any investment.
