The decision of the Central Bank of Nigeria (CBN) to suspend dollar sales to the Bureau de change operators has “disrupted one of the juiciest gravy trains in the Nigerian economic racket,” according to the a renowed economist, Bismack Rewane and his team.
In its economic note, Rewane and his team at the Financial Deravatives Company believed that though BDCs are licensed by the CBN, the point had been reached where the program was no longer tenable and surely not sustainable.
“A country whose total exports and receipts were approximately $59.8bn, was spending $5bn to subsidize supposed Nigerian tourists during a covid year.
“In other words, spending more on tourism rather than debt servicing. Therefore, the structure of the forex market needed sanitization,” the team of economists led by Rewane at the FDC said in the note.
The team, however, disagreed with the CBN on its decision to divert dollar meant for the BDCs to banks, saying such an amount to “handing over the yam barns to goats to secure.”
They said such interim solution of substituting BDCs with banks is hardly going to achieve much.
“The question that arises is what is the optimal solution? Administrative controls or market pricing? The interim solution of substituting BDCs with banks is hardly going to achieve much.
“You are virtually handing over the yam barns to goats to secure. In the end, there will be no yams nor goats.
“One of the options is to simultaneously allow banks to retail dollars as they have done in the past and make BDCs engage in retailing same but at a buy rate different from today’s subsidized rate, i.e buy dollars from the CBN at the parallel market rate less a N10 premium.
“For example, if the parallel market rate is N500/$, the purchase rate from the CBN will be N490/$. If the BDCs sell at N550/$, the CBN increases its rate for BDCs to N540/$.
“That will be the same retail rate at the banks. This eliminates the arbitrage corridor and abuse. It will certainly reduce the demand for dollars and it must coincide with an increase in dollar supply from the CBN.
“This way, the naira will appreciate towards the ever-elusive fair value or the REER (Real Effective Exchange Rate), which today is anywhere between N470 and N490/$,” FDC team stated.
Naira Gained Slightly at I&E Forex Window to N412.81/$US
Despite the Nigerian Naira trading at a record-low across the nation’s unregulated black market, the embattled currency opened slightly higher at N412.81 to a United States Dollar on Monday at the Investors and Exporters Forex Window, representing an increase of 0.08 percent when compared to the N412.88 it closed on Friday.
The improvement in Naira value was after the Central Bank of Nigeria (CBN) directed all depoisit money banks operating in the country to freeze bank accounts linked to Oniwinde Olusegun Adedotun, the founder of www.abokfx.com, a forex rate publishing platform.
Godwin Emefiele, the Governor, CBN had blamed black market and bureau de change operators for the constant plunge in Naira value against its global counterparts and insisted that forex rates remained the apex bank stipulated rates and not the unregulated rates imposed by speculators and hoarders and published to the public by Abokifx and other business platforms.
“There was a particular time I asked our colleagues to call the so-called owner of abokiFX, that we want to understand his model and how he came about advertising those rate, we find him as someone, a Nigerian who lives in England and conducts this nefarious activity on our economy.
“It is economic sabotage and we will pursue him, wherever he is, we will report him to international security agencies, we will track him, Mr Oniwinde, we will find you, because we cannot allow you to continue to conduct an illegal activity that kills our economy.” Emefiele said.
The governor further stated that the website was set up primarily manipulate and speculate forex rates. He said “they get naira loans, use to purchase dollars, take a position, change the rate over a given period, sell the dollars they purchased and make a profit, this is completely illegal, unacceptable and we will pursue them.”
On Friday, the last time Abokifx published unregulated forex rates, Naira was qouted at N570 to a United States Dollar while the British Pound and the Euro were quoted at N770 and N655, respectively.
U.S Dollar Jumps to Three Weeks High on Better Than Expected Retail Sales
The United States Dollar rose to a three-week high after data from the Commerce Department showed that the U.S retail sales rebounded in the month of August despite falling consumer confidence.
The US Dollar Index rose to 93.40 on Monday to extend Friday breakout above the 93.00 key resistance level.
U.S retail sales jumped to its highest in five months in the month of August to beat 0.8 percent decline predicted by experts. Retail sales grew by 0.7 percent in August to increase the odds of the US Federal Reserve announcing tapering during next week’s Federal Open Market Committee (FOMC) meeting.
“U.S. consumption is not slowing as quickly as it appeared a month ago despite the fading stimulus, and the Delta variant did not much affect the industries feeding into retail sales,” said Chris Low, chief economist at FHN Financial in New York. “The economy continued to hum in August.”
Against the Japanese Yen, the U.S dollar strengthened to 109.48 from 109.91 attained on Friday on broad-based selloff during London trading session, while heavy selloff plunged British pound against the U.S dollar 1.36610 before reboundling slightly to 1.36946.
The Euro dropped from 1.17883 recorded on Friday to 1.16995 on Monday during London trading session.
Naira Exchange Rates Today, Friday, September 17, 2021
Naira continued its downward trend against other currencies on Friday as it plunged to N570 against the United States Dollar at the black market. The local currency traded at N770 and N655 to British Pound and Euro, respectively.
Persistent forex scarcity amid a series of in effective policies have made access to forex impossible for most of businesses that operates in largely import dependent African biggest economy.
Nigeria’s forex reserves, the means in which the nation, service its dollar consuming 200 million population has been on a decline in recent weeks despite crude oil trading at over a year high of $73 a barrel. Some of the factors that have crippled the ability of central bank to cushion the economy with enough forex is low crude oil production, partly due to production cap, weak local manufacturing sector that has made the nation a huge import dependent economy, the ongoing crisis between herders and farmers, rising costs even with falling inflation, etc.
At the bureau de change section, Naira exchanged at N565, N775 and N655 to a United States Dollar, British Pound and Euro common currency.
The Central Bank of Nigeria (CBN) had stopped the sale of forex to the bureau de change operators to plug forex leakages and curb activities of criminal elements, the decision has worsen forex availability. See other forex rates below.
Naira Black Market Exchange Rates
Morning * Midday** Evening *** Final Rates
Bureau De Change Naira Rates
Central Bank of Nigeria’s Official Naira Rates
|9/16/2021||SOUTH AFRICAN RAND||28.3101||28.3446||28.3792|
N.B: These tables are updated three times a day.
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