The Naira is set to further depreciate in value as the Central Bank of Nigeria (CBN) yesterday stopped sale of foreign exchange to Bureau de Change
Emefiele said: “The BDCs were regulated to sell a maximum of $5,000 per day, but CBN observed that they have since been flouting that regulation and selling millions of dollars per day.
The CBN governor stressed that the apex bank “will deal ruthlessly” with commercial banks that are collaborating with the BDCs who sell dollars at the black market. Some analysts have expressed concern that the suspension of their ability to source foreign exchange from the CBN could have a significant impact on the country’s economy and bring naira under further pressure and depreciation.
Many had expected panic buying of the green back currency, but Alhaji Ibrahim Tanimu, a BDC operator in the area told our correspondent that he was just hearing of the ban of forex sale to the operators. “It is part of the moves by the CBN to sanitise the forex market, to try and reduce the impact of speculators, because there are some schools of thought that believe that the high rate we have in the parallel market is not driven by real demand but by speculators, those hoarding with the belief that they can make gains from further devaluation of the naira.
“A lot of banks try to avoid any form of forex trading but now that they are forced to do it, of course the best way for you to even get your basic travel allowance is to go through the bank. I don’t think it is a problem of capacity but a problem of meeting up with the different policies.
“This means that the dollar rate will go up and naira will depreciate at the parallel market. There are many items that are not on the CBN list that still require funding or investment. The banks will not sell dollars to you to buy Eurobond. So there will be scarcity because the demand is still there.
“Going forward, the CBN should ensure that purchase of forex via the banks which will now increase is made stress- free with minimal documentation. This is what pushes people to the parallel market,” he stated. “It is regrettable that the CBN does not believe in the market mechanism. Yet market systems are time-tested as instruments of efficient resource allocation in leading economies around the world. Of course, market failures are recognised in economics, and these are exceptions that can be identified and dealt with.
He added that “A fixed exchange rate regime is a major disincentive to inflows and creates enormous pressure of demand for forex. It is a contradiction in terms. Exchange rate unification is in line with the IMF and World Bank’s recommendations and so improves the country’s profile and credit standing before International financial institutions. It signifies that the country is serious in her reform efforts.
However, chairman of the Independent Corrupt Practices and Other Related Offences Commission , Prof. Bolaji Owasanoye said the private sector was responsible for over 60 per cent illegal movement of funds from Africa to foreign countries.
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