Naira slumps beyond ₦560/dollar after initial ₦550 Wednesday pose

By Gideon Adonai

Nigerian Naira on the evening of Wednesday fell beyond ₦560 to ₦562, after standing at ₦550 in the morning.

On July 27, the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, in his customary fashion of black suit and a lemon tie that the bank will be stopping the sale of foreign exchange (FX) to Bureaux De Change (BDCs).

This wasn’t unprecedented as such action had been carried out on two previous occasions under his tenure, but one thing was sure, the Naira was set for uncharted territory.

The local currency, which stood at 526/$1 at the end of last month, fell to 557/$1 at the parallel market on Tuesday, September 14.

This means that within two weeks, it has lost 5.9 per cent or N31 of its value against the United States Dollar.

This is particularly a telling sight as forex affects everything Nigerians use with a corresponding rise expected in goods and services.

“We are concerned that BDCs have allowed themselves to be used for graft,” Mr Emefiele had said when he announced the decision at the end of the two-day Monetary Policy Committee (MPC) meeting in Abuja.

He had accused the BDC operators of sabotaging the financial system and refused to sell the forex at a small margin different from the official Investors and Exporters (I&E) window.

Although the central bank says the black market is an illegal channel for sourcing FX, many Nigerians are left without a choice than to approach the unregulated market to meet their needs since they have been shut out of the official channels, especially importers of items on the FX restriction list.

In addition, those who are allowed to access forex at the I&E segment through the commercials are limited to a certain amount per quarter like the PTAs and BTAs, where the quarterly allocation is $4,000 and $5,000 respectively.

This situation is forcing many forex end-users to the parallel market, causing BDC operators to jerk the exchange rate higher, further widening the disparity between the rate at the official channels and the unofficial window.

READ ALSO: No plan to convert customers domiciliary accounts into naira – CBN

Although Mr Emefiele has been mute despite several calls from different quarters, requesting him to take an action to save the Naira from total collapse, the Director of Monetary Policy at the CBN, Mr Hassan Mahmud, while speaking at a virtual investor conference last week the major concern of the CBN, for now, was boosting Dollar supply to the market windows and not the valuation of the local currency.

He said the apex bank was worried about the supply side of the FX market and the confidence in the system, noting that the level of the Naira was expected to adjust based on demand.

No indication has shown that the Naira will stop its continued downward trajectory anytime soon with many calling for the resignation of the CBN Governor.

A member of the House of Representatives, Mr Tajudeen Adefisoye, had that Mr Emefiele has failed to heed the multiple calls of the National Assembly to appear before it to explain his forex policies and others.

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