Dollar scarcity persists as Naira drops to N515/$1
Amid persistent dollar scarcity, the Naira, which had made recent gains, remained pared to N515/$1 on Thursday.
The Naira had strengthened to 506/$ on August 4 after plunging to 525/$ at the parallel market on July 28, a day after the Central Bank of Nigeria (CBN) stopped foreign exchange sales to Bureaux de Change and had been hovering around 508/$ and 510/$ in recent days.
However, data obtained from abokifix.com, revealed that the Naira traded at 515 to a Dollar, 702 to the British Pound, and at N598 to the Euro. At the Investors and Exporters’ (I & E ) window, the Naira stood at 410.12 to the Dollar, leading to urgent calls that the apex bank should settle its divorce with the Bureau De Change operators (BDCs).
The CBN Governor, Godwin Emefiele, had on July 27, at the end of the Monetary Policy Committee (MPC) meeting, announced the stoppage of forex sale to the BDCs, saying they had turned themselves into ‘agents that facilitate graft and corrupt activities of people who seek illicit fund flow and money laundering in Nigeria’.
He said the CBN would channel a significant portion of its weekly allocation currently meant for BDCs to commercial banks to meet legitimate forex demand for ordinary Nigerians and businesses.
Analysts at Nairametrics noted that the CBN, being the sole arbiter of the Nigerian Financial System, made the right decision but at the moment, created the gap in supply and demand.
They noted that since the foreign exchange (forex) market is influenced by demand and supply, the idea of subjecting the demand of FX to PTA, BTA, School, medical fees and SME transactions is fundamentally uneconomic.
“Does a student’s need for monthly pocket money or emergency funds from his parents in the UK not count as legitimate? If yes, is this legitimate need provided for by the banks? No! This common transaction is easily done with the BDCs and here lies the gaps. There are legitimate concerns that making the banks the “be all and end all” would create another monster as they have also conducted illicit malpractices in the past.
The ABC of BDCs is to cater for the pocket FX needs of individuals and SMEs and its reach and accessibility provide a comparative advantage. Also, through their services, they contribute to the economic development of the nation via provision of data for the MPC, channels for CBN intervention in the retail forex market and creation of over 15,000 jobs among others”, the analysts explained.