The naira fell further to N475 against the dollar on the parallel market yesterday from N471/$ last Wednesday, as the weekly amount that Travelex and selected banks are allowed to sell to Bureaux De Change (BDCs) was reduced from $15,000 to $8,000. This is even as the naira seems to have stabilised against the dollar at between N304 and N305.50 on the official interbank market.
The local currency gained 50k to close at N304.50 last Wednesday on the interbank market compared to N305 it traded last Tuesday. At the official market yesterday, the naira closed at N305/$. President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, told New Telegraph that the reduction in dollar sales to BDCs was as a result of the need to ensure that more BDCs in the country are able to access dollars.
He said: “The amount of dollars sold had to be reduced so that it can get to more BDCs across the country. Dollars are now being sold to BDCs in Awka and Onitsha. Also, the total amount that Travelex brings to sell has not increased.”
He pointed out that the supply of dollars available to BDCs was limited because many would-be operators are reluctant to commence operations on the grounds that they are not pleased with the CBN’s controlled rates. While BDCs continue to sell the naira at the CBN controlled rate of N400/$ forex dealers predict continued decline of the naira on the parallel market due to raids by agents of the State Security Service (SSS) on operators in that market.
The SSS commenced the action on November 9, raiding BDCs, parallel market street traders and instructing them to cap their rates at N400 per dollar.
As a result, people are hoarding dollars rather than selling at an artificially low rate, forex dealers said. However, the Governor of the apex bank, Mr. Godwin Emefiele, has thrown his weight behind the raids, saying last Tuesday : “The security agencies should sustain their checks on the activities of illegal foreign-exchange operators in order to bring sanity to that segment of the market.”
A Bloomberg report yesterday stated that the raids are beginning to push the operators underground thereby creating a parallel market within the black market, according to analysts at Afrinvest West Africa Ltd.
The news agency quoted an analyst at Afrinvest, Omotola Abimbola, as saying: “The black market will go further underground. The fact they went as low as getting security forces on the streets shows a new level of desperation.” JPMorgan Chase & Co. was reported as saying that the development is another signal to foreign investors that Nigeria’s currency policy is broken.