By Adedapo Adesanya
On July 27, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, in his usual attire of black suit and lemon tie announcement that the bank will stop selling foreign exchange (FX) to exchange bureaus (BDC).
This was not without precedent, as such an action had been carried out twice during his tenure, but one thing was certain, the Naira was destined for uncharted territory.
The local currency, which stood at $ 526/1 at the end of last month, fell to $ 557/1 on the parallel market on Tuesday, September 14. This means that in two weeks it has lost 5.9% or 31 N of its value. against the US dollar.
This is particularly revealing as the forex affects everything Nigerians use with a corresponding expected increase in goods and services.
“We are concerned that the BDCs have allowed themselves to be used for corrupt purposes,” Emefiele said when announcing the decision after the two-day Monetary Policy Committee meeting ( MPC) in Abuja.
He accused BDC operators of sabotaging the financial system and refused to sell forex at a small margin other than the official Investor and Exporter (I&E) window.
Although the central bank declares that the black market is an illegal channel for the supply of foreign exchange, many Nigerians have no choice but to turn to the unregulated market to meet their needs because they have been excluded. official channels, especially importers of items in the market. List of exchange restrictions.
In addition, those who are allowed to access forex on the I&E segment via advertisements are limited to a certain amount per quarter, such as PTAs and BTAs, where the quarterly allocation is $ 4000 and $ 5000 respectively.
This situation forces many end users of forex to move to the parallel market, causing BDC traders to increase the exchange rate, further increasing the disparity between the rate of the official channels and the unofficial window.
Although Mr. Emefiele remained silent despite several calls from different quarters, asking him to take action to save the Naira from total collapse, CBN Monetary Policy Director Mr. Hassan Mahmud in a virtual investor conference last week noted the main concern of the CBN, for now, was to stimulate the supply of dollars at the market counters and not the valuation of the local currency.
He said the umbrella bank was concerned about the supply of the forex market and confidence in the system, noting that the level of the Naira had to adjust according to demand.
No indication has shown that the Naira will stop its continued downward trajectory anytime soon, with many calling for the CBN governor’s resignation.
A member of the House of Representatives, Mr. Tajudeen Adefisoye, had alleged that Mr. Emefiele ignored multiple appeals from the National Assembly to appear before it to explain its exchange rate policy and others.