Several officials at the bureau de change in the popular Wuse Zone 4 area of Abuja, the largest black market in Abuja, said The Africa Report that the euro was too unstable and they wanted to avoid incurring losses.
The few who were willing to buy euros did so at a value price in order to protect themselves from losses.
The euro briefly fell below parity with the US dollar for the first time in 20 years during the week of July 11. In Nigeria, while the greenback was selling for around 615 naira on the parallel market, the euro was pegged at 610 naira on Thursday July 14. By Friday, many traders had completely stopped trading the euro.
“We are not buying or selling Euros at the moment. It is too unstable,” said a cashier at 313 Bureau de Change, one of the biggest money changers in Abuja.
Another operator also said The Africa Report that many expats and diplomats had converted their euros into dollars to protect themselves from any loss over the past week.
“Many of my clients who earn in euros started converting their money into dollars last week. I don’t see things changing until early September when many Nigerian students studying in Europe will have to pay tuition fees. “Euros will definitely rise by then. Maybe we’ll start trading by then if the European crisis doesn’t change,” another trader said.
A word from the President
Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria, said The Africa Report on Friday July 15 that some of its members were still trading euros.
Gwadade added, however, that the currency has become unstable and its demand has plummeted, hence the decision of many traders to avoid the currency.
“The euro fluctuates very quickly. And the demand is very low in Nigeria. So many people almost never want to buy it and lose money. It’s a high risk. You may end up losing because it is too volatile. The crisis in Europe also poses problems. All of these elements together contribute to [currency fluctuation]. However, I still have members trading in euros,” he said.
Economist Muda Yusuf, former chief executive of the Lagos Chamber of Commerce and Industry, said The Africa Report that the operators of exchange offices protect themselves.
“You don’t want to be exposed to a currency that is volatile and operating in an unpredictable situation because the risk is high. They can buy now and it will crash. And then they will be forced to sell at a loss. Refusing to buy is just a risk management mindset, which is not bad,” he said.
There are widespread concerns about a potential recession in Europe, in part due to a looming energy crisis. Russia is threatening to suspend gas flows to Europe in retaliation for EU sanctions since invading Ukraine.