This is the aftermath of liberalising the foreign exchange
regime, which is a clear departure of what obtained during the President
Muhammadu Buhari- led administration.
At a time during the last administration, the World Bank and
other agencies, as well as experts in banking, finance and economy had at
different times said having official and parallel value for the naira was
hurting the economy and at the same time making a few privileged people
pocketing billions of dollars without producing anything as they get the forex
from the CBN at official rate and instantly sell same at the black market.
Recall that during his inauguration on May 29, 2023,
President Tinubu had said, “Monetary policy needs a thorough house cleaning.
The Central Bank must work towards a unified exchange rate. This will direct
funds away from arbitrage into meaningful investment in the plant, equipment
and jobs that power the real economy.”
On June 14, 2023, the CBN abolished the segmentation of the
forex market into different windows and told Deposit Money Banks to freely
float the naira against the dollar and other international currencies.
Buyers and sellers of foreign currency in the official FX
market were then allowed to quote their preferred rates, as against previous
practice where CBN dictated rates.
Wittingly or unwittingly, naira has since continued on a
free fall at the parallel market despite the move.
When Daily Trust reached out to forex traders in Abuja
yesterday, they quoted the exchange rate as high as N915/$1 for cash trades.
Similarly, the dollar exchanged for between N880 and N890 in
Lagos, the commercial capital of Nigeria.
Our reporter who monitored the situation at the Murtala
Muhammed International Airport, Ikeja as well as Allen Junction, noticed that
the greenback was bought for as high as N890 by Bureau De Change operators in
the state. However, the operators sold it for between N900 and N905.
An operator at Allen Roundabout in Lagos, Ismail Muhammed
said: “The dollar has not reached N900 in Lagos. We are buying for N890 at the
moment”.
In Kano, while the parallel market closed on Tuesday with a
dollar trading to a naira at N900, it opened at N919 to a dollar on Wednesday
as against the N750.2/dollar at the I&E market, signifying a gap of about
N169 between the parallel market and the I&E market.
However, we gathered that around 1pm, the price further
surged in Kano’s Wapa Forex Market to N925 to a dollar.
I & E window closes at N757/$1
Meanwhile, in the official Investor and Exporter Window, the
exchange rate closed at N757.81/$1 while the NAFEX rate was N776. The official
market also faces supply constraints, with daily turnover averaging $80 million
since July.
The peer-to-peer market, where cryptocurrency traders
exchange forex, also saw the exchange rate soar above N900/$1.
Naira falls 19.8% since Fx unification
The exchange rate between the naira and dollar has weakened
by 19.8% since the reunification of the exchange rate windows. This compares to
a depreciation of 2.5% between January 1 and June 14th (before the
unification). The exchange rate weakened by 22.9% in the whole of 2022.
The disparity is now N153/$1, one of the widest since the
unification of the naira on June 14th, 2023.
The naira has been under pressure in the parallel market for
several weeks, as the supply of forex from official sources remains inadequate.
On July 1st, the beginning of the second half of the year,
the exchange rate in the parallel market was around N772/$1.
However, a surge in demand from various segments of the
economy, such as importers, foreign travellers and speculators, has triggered exchange
rate volatility. - Daily Trust
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