Barely 10 days after the CBN stopped forex sale to importers of rice, textile and 39 other items, the naira on Wednesday crashed to 230 against the United States dollar at the parallel market, down from 218 recorded on June 23 when the new forex rule was introduced.
The policy, which has pushed huge forex demand from the interbank (official) market to the parallel (black) market and the Bureau de Change retail segment, has led to artificial scarcity of dollar and other major foreign currencies as operators now hoard them in anticipation of higher prices.
The naira had fallen to 220, 223, 226.5 and 228 against the dollar in the past one week.
Black market and BDC operators, however, told our correspondent that serious dollar liquidity squeeze was already hitting the market and operators were no longer in possession of huge stock of forex to meet rising demands, especially from the importers of the banned items.
Using the CBN figures, analysts had estimated that about $5.7bn quarterly forex demand was being transferred from the official interbank market to the black market.
“The situation is getting critical now. There is serious dollar liquidity squeeze in the market now. The demand is overwhelming and both the black market and the BDC segment can no longer meet the demand,” a black market operator told our correspondent on Wednesday.
“The market is very volatile now as a result of the restrictions placed on about 41 items by the central bank. Most importers are now patronising the parallel market to source their dollars,” the head of a BDC, Mr. Harrison Owoh, told Reuters on Wednesday,.Meanwhile, the Association of Bureau De Change Operators has written to the CBN asking it to intervene in the dollar scarcity in the parallel market and the BDC segment to save the naira from crashing further.
In the letter, a copy of which was obtained newsmen, the association expressed its readiness to work with the CBN to stabilise the market.
The letter, signed by association’s President, Alhaji Aminu Gwadabe, and Executive Secretary, Uduma Cletus, advised the CBN to increase its weekly forex sale to the BDCs from $30,000 to $50,000.
The body also asked the central bank to reintroduce the autonomous market where it could sell about $100,000 to the operators.
Gwadabe told our correspondent that it was expedient for the CBN to increase its forex sale to the BDCs in order to stabilise the naira.
Some analysts believe the naira may hit 240 against the dollar in the coming days.
However, the naira traded at 198.95 to the dollar at the interbank market on Wednesday, according to Reuters.
The central bank had lowered its exchange rate peg to N196.95 to the dollar on Tuesday from N196.90 last week
Also, a trade of $735.74m went through on Nigeria’s interbank currency market at N198.45 on Wednesday, Thomson Reuters data showed.
Market sources said a foreign client had sold dollars to a bank in Nigeria. Total interbank market volumes stood at $1.12bn on Wednesday, far higher than typical trading sessions since the central bank introduced a naira peg in February.
Meanwhile, the CBN has reminded dealers and banks that their dollar cash sale for six items, including schools fees, insurance premium, basic travel allowance and monthly mortgage should not exceed $5,000.
In a new circular dated July 1, 2015, the CBN also warned banks not to sell forex to the importers of the 41 items that were banned from the forex market last week. Click to signup for FREE news updates, latest information and hottest gists everyday
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Hmmmmmmmmmm.Buhari what is happening now after you told us that Nigerian currency will come close to one dollar , every thing you said is just to confuse people and enter as president , let us see your change now?
ReplyDeleteThese BDC operators clamouring for CBN to increase FOREX sales are talking like illiterates. They don't seem to know that CBN does not have the dollars to sell, and that is why the new FOREX restrictions are in place.
ReplyDeleteHmmmmmmmmmm.Buhari what is happening now after you told us that Nigerian currency will come close to one dollar , every thing you said is just to confuse people and enter as president , let us see your change now?
ReplyDeleteilliteracy is a disease,we are just waiting for 1 naira to be equal with $1....Fuel price nko,what is still holding him to reduce the fuel price ??? Everything na wash wash...e go still clear for our eyes...
ReplyDeleteWen I dey talk, it be like na only me no like Nigeria to progress. Say an old brain can't be beta than a young brain, una no free. OK. We dey watch oo. Say him go lift world oil price, shebi him na God or wetin? Make all APC supporters continue to they talk oo. Shebi na diarrhoea dey worry una mouth
ReplyDelete