Nigeria’s local currency, the Naira has continued to crash against the US Dollar in the parallel market as it is now exchanged at a historic N300 per dollar in Kano, N290 in Lagos and N292 in Abuja.
Despite the recent ban announced on Monday, January 11, 2016 by the Central Bank of Nigeria, CBN, on the sales of foreign exchange to Bureau De Change operators, the currency has continued to depreciate.
Although the CBN’s decision was lauded by the private sector, the Acting President of the Association of the Bureau De Change Operators, Alhaji Aminu Gwadabe, stated that it was not going to have any effect.
He said: “There is cut of (dollar) supply to the market. The BDC sub-sector has been murdered. We are not coping. The naira is going to head northwards. There is no solution in sight.”
Buttressing Gwadabe’s position, a Professor of Financial Economics at the University of Uyo, Akwa Ibom State, Leo Ukpong, said the move by the apex ban would only weaken the Naira further.
He said: “I don’t think the stoppage of dollar sale to the BDCs will solve the problem.
“The currency will depreciate some more. This move will make the naira to weaken more as demand for dollar will skyrocket because of the short supply.”
The Head of Investment Research, Afrinvest West Africa Limited, Mr. Ayodeji Ebo, said the apex bank’s decision suggested that they wanted everybody to apply to the banks for dollars.
He said: “But we feel the pressure now will move from the BDCs to the parallel market. We will see significant spike in the value of the naira at the parallel market because the little supply to the BDCs have also helped to cushion the demand at the parallel market.
“It will further compound or increase the spread between the parallel market and the interbank market. So, it will also increase round-tripping and unethical practices within the financial system.”