Like scavengers out to make a kill, forex vendors from neigbouring countries of Benin Republic, Niger, Chad, Sudan, Ghana and other African countries have taken the nation’s forex market by storm thanks to the wide margin between the official and parallel market rates in Nigeria to make huge profits, Ripples has learnt.
Ripples gathered that these forex speculators are moving in huge dollar deposits to meet the rising demand by Nigeria importers, and other buyers that require the greenback to pay for their children’s school fees and medical fees not met by the Central Bank of Nigeria(CBN). Although the exchange rates are high, the urgency and necessity of these transactions have left the buyers with no option than to buy from the parallel market.
The official exchange rate has remained at N197 to dollar in the last six months, creating a huge gap between the official or interbank rates and parallel market rates.
Corroborating Ripples findings, the development President, Association of Bureau De change Operators of Nigeria (ABCON), Aminu Gwadabe said over $100 million inflow was recorded last Friday, a development which led to a temporary appreciation of the naira against the dollar.
The naira had on Friday traded at N365 to dollar, from N391 against the dollar the previous day because of the immediate liquidity the dollar inflow brought to the market.
Gwadabe said that by Saturday, the naira had again depreciated against the dollar as it exchanged at N375 to dollar adding that the volatility in the forex market is expected to continue this week.
Gwadabe said over $100 million inflow was recorded last Friday, a development which led to a temporary appreciation of the naira against the dollar.
“Foreigners are taking advantage of the naira situation. We have 18 countries within the continent where the naira is acceptable as a means of exchange. The speculators are coming in because of the huge gap between the official and parallel market rates,” he said.
Gwadabe said that exporters, mainly from Dubai are establishing agents in Nigeria, which accept naira from importers at agreed dollar rates who then travel with certified invoice to bring in the goods, a practice, he said, that has reduced pressure on the naira.
“In my own view, the CBN should address the supply side of the market by allowing oil companies and banks to sell dollar to bureau de change operators as an immediate measure to reduce pressure on the naira,” he said.
Tumbling global oil prices have battered Nigeria’s crude exporter, with foreign exchange reserves down to an 11-year low at $27.85 billion.
The Federal Government is concerned that further naira depreciation will hurt poor Nigerians, but the CBN’s refusal to revise the pegged exchange rate has widened a gap between official rates and the parallel market.
Exporters, mainly from Dubai are establishing agents in Nigeria, which accept naira from importers at agreed dollar rates who then travel with certified invoice to bring in the goods, a practice, he said, that has reduced pressure on the naira.
Managing Director, Cowry Assets Management Limited, Johnson Chukwu said economic agents are rational, and will go to where their values will be maximised or their risk will be minimised. He said Nigeria does not have the financial resources to solely develop its economy in the short to medium term and that current global social architecture has made absolutely closed economic borders impossible.
He said the crisis in the economy seem to be worsening progressively since the crash in Oil prices from a high of about $115.09 (Brent crude spot price) on June 19, 2014 to $34.83 (Brent crude) presently.
This is despitea barrage of monetary and administrative policies introduced by the CBN to stabilised the exchange rate and restart economic growth.
“While the CBN has been active in trying different options, business managers and investors are still waiting for the managers of the fiscal policies to present their response to the crises, which should be harmonised with those of the monetary authorities,” he said.