By Dipo Olowookere
The Nigerian Naira is now being battered from different directions, further weakening its value against the United States Dollar at the parallel market.
While the Nigerian currency was still battling with a shortfall in the supply of foreign exchange (FX) in the financial system, the Central Bank of Nigeria (CBN) last Wednesday announced plans to introduce new designs of the N200, N500, and N1,000 notes into the system.
This announcement plunged the value of the domestic currency in the market as those who had stashed the Naira at home were looking for Dollars to exchange it with.
As the local currency was still strategizing out ways to survive this pressure, the Economic and Financial Crimes Commission (EFCC) on Tuesday added fuel to the fire by arresting some Bureaux De Change (BDC) operators in Abuja and Kano, with plans to carry out similar raids in Lagos and other cities.
This has sent panic into the market and has made forex traders at the black market transact business in fear.
On Wednesday in Lagos, the Naira was exchanged to the American currency at N850/$1 compared with the N816/$1 it was traded on Tuesday.
This has been attributed to the action of the anti-money laundering agency.
“This action [of the EFCC] will only worsen the already tensed situation,” one of the FX hawkers in Lagos, who asked not to be named, told Business Post this afternoon.
“We have been on this road before, it is not new to us. They would soon be tired, but if they continue, I can tell you for free that the Naira will hit N1,000 before the end of this year,” another trader said, also asking not to be named.
This is not the first time security operative have gone after forex traders at the black market, which the CBN describes as an insignificant part of the FX market.
“For the information of everybody, parallel market, as far as we know it and the data that we have, is a shallow market in Nigeria with no more than 5 per cent of market share.
“Parallel market and quote me is a tainted market in Nigeria, where people who desire to deal in illegal foreign exchange transactions including sourcing of FX cash for purposes of offering bribes, corruption, that is where they deal,” Mr Godwin Emefiele, the head of Nigeria’s central bank, once said about two years ago.
The inability of customers to access FX from commercial banks had always pushed them to the black market.
This newspaper recently reported that the scarcity of forex had forced banks to ration FX in cash to customers, resorting to electronic transfer.
