Naira Falls to N750/$1 at Parallel Market on FX Liquidity Squeeze
By Dipo Olowookere
The persistent squeeze in foreign exchange (FX) liquidity in Nigeria has further battered the value of the Naira against the United States Dollar in the black market.
The exchange rate of the Naira to the Dollar crashed to N750/$1 on Friday noon, according to data obtained by Business Post from forex traders on the streets of Lagos.
“We have not been able to get Dollars from the various sources, which is putting pressure on the Naira. The few with us are being rationed,” a forex trader in the Alimosho area of Lagos State, Mr Abdulahi Musa, told this reporter.
This reporter, who visited some commercial banks in the area to have a feel of the availability of FX, observed that most customers are unable to get Dollars in cash.
The bank officials at the FX desks of the financial institutions visited tell their customers that they are still expecting forex allocations from the head office.
One of them, who spoke with us on the condition of anonymity, said, “We do not have Dollars at the moment; what we have are the lower denominations like $1 and $10.
“You know that the CBN (Central Bank of Nigeria) has stopped allocating FX to banks. We are now to source FX, and this is affecting us.”
An aggrieved customer in one of the banks claimed the lenders hoard the forex to resell to FX hawkers.
“I want to believe that the banks have Dollars, but they intentionally refused to give their customers. What they do is to cajole you into accepting to transfer the Dollars to an Aboki (Bureaux De Change operator) stationed in the bank and tell you to fill a form that the cash was collected by you,” the aggrieved customer, who simply identified himself as Lekan, told Business Post.
At the unofficial FX market on Thursday, the Naira was sold at N735/$1, indicating that under 24 hours, the value of the Nigerian currency has devalued by 2.04 per cent or N15.
It was observed that the crashing of the domestic currency had been caused by the inability of customers to access FX from their banks. This puts pressure on the parallel market, allowing hoarding and speculative activities as electioneering begins.
Politicians have been blamed for mopping forex from the system to prosecute elections, as one of the bankers informed this reporter.
“Most politicians convert their Naira to Dollar because it is easy to have millions of Naira in a few Dollars. But we hope that the FX environment will be better after the elections,” the banker noted.
Recall that a few months ago, the Governor of the CBN, Mr Godwin Emefiele, warned that anyone caught converting Naira to Dollar or other foreign currencies would be severally dealt with.
“For those taking money from banks to buy dollars, it is illegal to do so. If the security agencies hold you, you will know the implication.
“We are monitoring customers and banks, and any bank involved would be sanctioned. We will place Post no Debit on the defaulting customer’s account.
“It is a very injurious tool to stop you from conducting illegal flows, either domestic or foreign currency. We will conduct investigations, and we will have proof, and you will not be able to conduct transactions in any Nigerian bank,” Mr Emefiele said.