Ever since the introduction of online forex trading into the Nigerian society, a lot of traders have embraced forex trading as an alternative means of making extra income for themselves. However, have you ever considered the impact of online Forex trading in Nigeria?
Nigeria has a population of 173.6 million people. Hence, it will be fair enough to say that the recent statistics of about 500,000 active traders, do exist. However, my research revealed that there is a surprising twist to the number of successful traders in Nigeria. Many Nigerians have lost a lot of money trading forex and the major factor arises from lack of proper education. The fear of losing and the negative impression traders have about forex has led many to think that forex is too complicated. Also, it spurred the believe that one can succeed as a trader becomes a fantasy.
Overview of Nigerian Forex Market
The Forex market is the most traded Nigerian financial market. The market officially operates under three sections:
. The Central Bank of Nigeria (CBN) which is the Primary Market,
. The OTC which is Secondary Market and;
. The Bureau-de-Change which is the street Market/ black market.
The CBN is the largest dealer and leader in the Nigerian Forex market. While the OTC market is the most influential and decisive market. The currencies that are being traded in Nigeria Forex market are: the USD, Canadian Dollar (CAD), Swiss Francs (CHF), Euros (EUR), Pound Sterling (GBP), Japanese Yen (JPY) and South African Rand (ZAR). While the most traded currency pair is the USD/NGN. This explains the upward trend of dollar rate against naira in forex market. Given the global fall in oil price.
Consequences of Forex trading in Nigeria
So many economic factors and policies by the government has affected the growth of the industry both positively and negatively. With the recent devaluation of the naira and the falling oil prices, most traders get discouraged in trading forex. These recent happenings in the economy has equally affected businesses to a great extent. Since crude oil accounts for 80% percent of total government revenue and about 40% of the nation’s GDP.
The continuous fall in crude oil price and decline in the supply of forex has resulted to the depreciation of naira against dollar. Given that the Nigerian economy is currently crude oil dependent. In an effort to tackle the precarious financial situation of the country. CBN introduced monetary policies that imposed certain restrictions on the supply of foreign currencies. This action has limited people from sourcing for funds.
Positive impact of online Forex trading in Nigeria
On the positive side, even with all the political, economic and social factors affecting the growth of the economy. Nigeria still happens to be one of the best country in Africa to invest in online forex. A reasonable number of traders in Nigeria, who are very knowledgeable, have taken advantage of the opportunities in trading forex to make a living.
There exist a strong network of IB’s (Introducing Broker), who are ever ready to assist any individual willing to understand the dynamics of forex trading by attending free seminars and webinars. With the high unemployment rate in Nigeria, so many Nigerians have chosen to build a career in trading forex.
Recently at a press conference in Lagos, the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said members of the body had agreed to set a weekly reference rate to improve liquidity. This will bridge the gap between the parallel market/black market and interbank rate. In order to help rebuild investors’ confidence in the economy. He said the naira’s outlook was promising as crude prices had started to rise.
About the contributor
The article about online Forex trading in Nigeria was written by Sixtus Emeka Ughamadu, the Sales Director at Blackwell Global Nigeria. If you like the article, give credit to the author in the comments section below.