The rate at which the naira has dropped against the dollar in recent times has prompted the Central Bank of Nigeria, CBN, to launch investigations to uncover the reasons behind the alarming drop.
Since the restriction of 41 items from the foreign exchange market on Sunday, June 28, 2015 the nation’s currency has depreciated by N42 in the parallel market to the point that it was exchanged at N242 per dollar on Friday, July 17, 2015.
Investigations by Vanguard revealed that the apex bank dispatched three of its directors to Lagos, on Tuesday, July 14, 2015 to conduct market surveillance. Specifically, they were given the mandate to discuss with Bureau de Change (BDC) operators to ascertain what is causing depreciation of the Naira in the parallel market, and measures that can be deployed to address the depreciation.
Speaking on the development, Managing Director, Sabil BDC, Alhaji Aminu Gwadabe, said, “We told them that the reason is that the forex users know that CBN sells to BDCs on Wednesdays, hence they always position their demand against what the BDCs will get from CBN. But because what the CBN sells to us is not enough to meet the demand, the exchange rate rises further.
“We also told them that the solution is to increase the amount of forex they sell to BDCs. That is how we can narrow the N46 gap between the official rate and the parallel market exchange rate.”
Managing Director, H. J. Trust BDC, Mr. Harrison Owoh, added, “The depreciation of the Naira in the parallel market is driven by genuine demand from importers banned from the foreign exchange market. You know we cannot sell to them. They can only buy from the black market. Hence the black market is dictating the rate.
“More so, BDCs have only two sources of dollars — what we buy from CBN and from walk-in-customers. So, we don’t have supply, we also are limited in who we can sell to. So the market is determined by the black market. The solution is for the CBN to increase dollar sales to BDCs, otherwise the rate might continue to go up.”