BY EMEKA EJERE
Despite assurance by the Central Bank of Nigeria (CBN) that there is sufficient foreign exchange to meet the legitimate needs of Nigerians, the naira has maintained a downward trend at both the official and parallel markets.
Data from the FMDQ securities exchange window where forex is officially traded, showed that naira closed at N414.90 per $1, the lowest it has ever traded at the Investors and Exporters window.
The currency’s performance on Friday represents N1.22 or 0.30 per cent devaluation from N413.68 it exchanged on Thursday. Forex turnover dipped by 10.10 per cent with $193.59 million recorded against the $175.86 million posted in the previous session on Thursday.
Naira staged an intraday high of N400.00 and a low of N415.20 before closing at N414.90 per $1 on Friday.
This is coming barely one week after the CBN expanded its clampdown on those it claimed contributed to the currency’s rapid decline in recent months. The apex bank had stopped sales of forex to Bureaux De change operators and last week forced AbokiFX, an online forex publication to stop publishing black market rates.
This led AbokiFX to suspend publication of its forex rates of naira to other currencies. Despite the suspension, the naira fell to N580 on Monday, and traded around N575 to the dollar as of Thursday at the parallel market.
According to Premium Times, at the black market in Abuja on Friday, dealers said naira exchanged as low as 570 in the morning, but later rose to 568 per a dollar in the evening as demand reduced.
The online medium also reported that in Uyo, Akwa Ibom State, dealers said the local unit exchanged hands with the hard currency at N570 in the morning, but later sold for N560 per a dollar at the close of the day’s business.
“Since it’s the weekend already, people are afraid to keep their dollars so that it will not depreciate in value since we can no longer use abokiFX.com. Traders are now using their intelligence to sell their dollar so they will not be running losses,” one dealer who pleaded anonymity was quoted as saying.
CBN spokesman, Osita Nwanisobi, had said the apex bank remained committed to meeting the foreign exchange request of travellers with legitimate needs as they related to travel allowances, payment of tuition and medical fees among other invisibles.
“There is enough supply of foreign exchange to the banks to meet legitimate demands for foreign exchange,” he said.
Nwanisobi said that no customer requiring foreign exchange for genuine transactions would be turned back by their banks. He urged the banking public to insist on their rights to be attended to as long as they possessed all the requisite documents to validate their requests.
Nwanisobi said that the CBN would not hesitate to approve foreign exchange for customers with legitimate demands that exceeded transaction limit as long as the application was supported with specified requirements.
After the last Monetary Policy Committee meeting in Abuja on Friday, the CBN Governor, Godwin Emefiele, had defended the decision of cutting forex allocation to the BDCs, describing it as a practice that was not sustainable.
He said the only rate of the naira that the CBN recognised was the rate at the I&E forex window, adding that it expected genuine personal and business travellers to approach the banks for their forex needs.
Meanwhile, a former Deputy Governor CBN, Kingsley Moghalu, says the value of the naira will fall from N570/$1 to N400/$1 at the parallel market if there is a massive rush of dollars into the Nigerian market through export earnings.
Moghalu, who spoke in an interview with a national daily on Thursday, said, “The reason we have the prices we have is that the official rate is perceived by the market not to be the real rate; that’s the fundamental reason why you have a huge gap of N410 at the official rate – Investors and Exporters’ Window – and then N570 in the black market. That is unbelievable.
“Normally, you will have a gap between the official rate and the parallel market but in our time, we made sure that that gap was not a lot – it wasn’t more than N10, N15, max N20.
“What is happening now shows that there is a very fundamental crisis in the Nigerian economy. And unfortunately, the economy does not respond to political commands, the economy does not respond to political statements, the economy does not respond to military orders; the market responds to its own dynamics – demand and supply.
“If you have a massive rush of dollars into the Nigerian market today, the price of the dollar would crash and the naira can come to N400 in the black market, you may be shocked. So, it is about going to fix what would bring in the quantity of dollars that would rebalance the equation.”