Naira-dollar gap widens, nears N1000/$1, as forex scarcity hits banks, BDCs
Barely days after scaling a record all-time high of N900/dollar mark at the parallel market last week, the Naira has now reached N925/dollar at the various commercial banks and bureau de charges (BDCs) in Lagos.
It would be recalled that, last Friday, the local currency hit a high of 799/$ before closing at 740.60/$ at the I&E forex window.
However, by Monday morning trading at the parallel market, the naira closed at 930/dollar in Lagos and 960/$ in Abuja at the parallel market.
This is also as reports of U.S Dollar shortages became rife, following claims of insufficient dollar banknotes resurfacing at the various commercial banks across the country. A situation which was also visible at the parallel market, as operators lamented the shortage.
Reacting to the development, President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said liquidity squeeze in the foreign exchange market has continued to subject the Naira under heavy attack from speculators.
“The dwindling supplies in the I&E window shifted the demand to the parallel market where volatility and spikes is most pervasive. The entire forex market is plagued by liquidity shortages.
“The banks, as a result of the supply shortages, are limiting their available position for the financing of visible letters of credit and abandoning the invisible request like PTA, school fees, medicals of their clients and inadvertently adding more pressure in the parallel market.
“As it is, most licensed BDCs due to their demand for KYC requirement have lost their clients to the parallel and undocumented space with no regulation and standardisation. It is indeed a difficult time for most of our members as we are excluded from the harmonised market.”
On solutions to the situation, Gwadabe said Nigerians should aspire to have a stable exchange rate devoid of illegal economic behaviour like arbitrages, hoarding and panic buying.
“ABCON is desirous to partner the apex bank and the Federal Government for an elaborate dialogue and engagement to champion paths to naira recovery.
“The financial architecture should be reviewed to include BDCs in the harmonised markets.
“The monetary and fiscal authorities should create enabling environment and friendly policies”, he said.
Also reacting, some bank officials said the Central Bank of Nigeria (CBN) decision to remove cash deposit limits on domiciliary accounts in June had led to the repatriation of funds through the banks, which in turn, they claim has resulted in the dollar surpassing supply significantly.
The CBN had in June, this year, in a circular, enabled free floating of the naira against major global currencies.
Since then, free floating has almost translated into a free fall of the local currency, starting from N471/$ it exchanged at the Investor & Exporter window to N664/$ the next day, and now a near N1000/$.
