The Naira was at a record low against the dollar on Thursday, depreciating to nearly N550 at the unofficial market from N530 at last week’s close as demand for the greenback from importers continues to bump up against scarce market liquidity.

Checks in Kano revealed the record high forex rate especially at the Kano’s popular Wapa BDC market in Wapa, where forex traders said as of Thursday evening, a dollar was exchanging for N549, and that it could even exceed N550 before the close of the day.

Aminu Shua’ibu Malan, a trader in the market, said: “Prior to the last three days, it used to be around N520, but has now reached N550.

“This is caused by the high demand by importers and its scarcity courtesy of this Central Bank of Nigeria (CBN) policy. We are afraid that if this policy continues, a dollar could reach about N600-N700, which will surely spell doom for our economy.”

The traders, who said that there is no hope in sight as to when the Naira will appreciate, called on the apex bank to have a rethink on its dollar ban policy in order to save the country’s economy.

In Abuja, the Naira continued a free fall, shading off about N12. At the Wuse Zone 4 BDC market, most of the forex traders sold the naira for between N540 and N542 to the dollar, as against about N528/$1 last week.

A BDC operator named Sumaila said he sold for N540/$1. He also said the price has spiked because even the banks don’t sell to BDCs, yet most SMEs get their forex funding needs from BDCs’ supplies.

Some other BDC operators said they sold the dollar for between N540 and N542.

Ibrahim Audu, a forex hosteller who prospects for customers at Wuse Zone 4 Abuja, told our Correspondent he could arrange for N542/$1 if the Correspondent would sell up to $10,000.

At the Murtala Muhammed International Airport (MMIA) Lagos showed that dollars exchanged for between N530 to N535 at the parallel market.

“We started at N525 this week and it has continued to rise because of high demand,” says a Bureau De Change operator.

“We don’t even understand it again. They said banks should give dollars and when you go there, they would tell you there is no dollar. The banks too have become Bureau De Change,” another BDC operator, who identified himself simply as Hassan, said.

“We now sell at N529, N530. We hope very soon, things will change and CBN will reconsider their stand,” he added.

EFCC reads riot act to bank heads

In the meantime, Chairman of the Economic and Financial Crimes Commission (EFCC), Mr Abdulrasheed Bawa, has warned banks against fraudulent election financing, foreign exchange malpractice and money laundering.

Baba gave the warning on Thursday during an interactive session with managing directors of banks at the Lagos Zonal Command of the commission.

According to a statement by the EFCC spokesman, Wilson Uwujiaren, the anti-graft agency boss charged the bankers to comply with the guidelines of CBN on the issuance of Personal Travel Allowance, PTA, and Business Travel Allowance, BTA, to their customers.

“You need to ensure full compliance with regard to knowing your customers and ensuring that you do not give opportunities for foreign exchange malpractices,” he said.

Pointing out the salient issues EFCC will tackle, Bawa said, “Some of the issues we have identified include foreign exchange malpractices and fraudulent election financing.”

‘Banks selling to cabals’

The Chairman of BDC Operators, Local Airport, Mr. Danladi Sunday blamed the CBN for the development.

He said while the CBN had directed commercial banks to sell dollars, the banks only supply to “cabals.”

“The stoppage of dollars to bureau de change is the cause of this problem. The CBN said they would be giving to commercial banks and the commercial banks are not selling to everybody, they are only selling to their cabals,” he alleged.

“And once the demand is higher and supply is lower, definitely, the money is going to be high. The solution now is for the CBN to call us back. Once they call us back, the money would come down.”

Trading Desk Manager at AZA Murega Mungai said: “Despite the current weakness, the central bank on Tuesday said it still expects the country’s unofficial and official rates to converge.”

The Naira was trading at 411.30 to the dollar on the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) window this week. We expect the currency pressure to persist in the coming days as demand for forex continues to outweigh supply.

SarkinYarki:
Like I predicted when that slow Emeiefele banished BDC without a concrete plan and now we are there back to the era of Bank Forex fraud .. Emeiefele should be sacked

Corden and Neary (1982) have demonstrated how Dutch disease occurs in an economy. According to them, in a country experiencing "boom" in the export of a commodity, the economy can be divided into three sectors: the "booming" export sector, the "lagging' traditional export sector and the non-export sector. The Dutch disease occurs when the traditional export (tradable goods) sector is crowded out by the booming export sector and the non-tradable goods sector. The lagging traditional tradable goods sector may include cocoa, palm produce, cotton, rubber, coal, copper, textiles and some manufactured goods while the booming export sector may be crude oil, coffee, gold, etc. The non-tradable (non-export) goods sector covers all those goods that are produced for domestic consumption only, e.g. staple food items, clothing, building materials, locally-assembled cars. Where crude oil (and gas) is the booming export sector, the non-oil export sector may be crowded out by the oil sector and the non-tradable goods sector of the economy. This can happen when the oil revenue windfall increases domestic demand for non-tradable goods and pushes up domestic prices leading to an appreciation of the real exchange rate which in turn reduces the competitiveness of the non-oil export sector. This will in turn lead to a reduction in non-oil exports in both quantum and value terms. The oil windfall may also lead to movement of the factors of production in the economy. For instance, capital and labor (and land) may shift from the non-oil export sector to the oil sector (in order to maintain or increase reserves and production) and the non-tradable goods sector (to take advantage of the growing domestic demand). This explains why the increase in oil prices and the subsequent oil revenue windfall in many oil-exporting countries have tended to depress their non-oil export sector while at the same time generating a boom in both the oil and the non-tradable goods sectors. With capital and labor shifting from the non-oil export sector to the oil-sector and non-traded goods sector, firms in the non-oil export sector are forced to either close down or reduce their scale of operation. The boom in the oil and non-traded goods sector increases the demand for imported goods. This may not be a problem in the short-term so long as the country has enough foreign exchange to pay for the imports. The depression in the non-oil export sector and the boom in the other two sectors have medium to long term implications for the economy because the oil windfall will not be permanent given the volatility, unpredictability and exhaustibility of crude oil. For instance, if there is a decline in oil prices and oil revenue, the lagging and collapsing non-oil export sector will not be able to compensate for the drop in oil revenue while domestic demand for the non-traded goods and imports remain sticky. Consequently, the country will be forced to borrow from the international financial market to compensate for the decline in oil revenue. Over time, external debts will increase and so will the debt service obligations. Even when oil prices go up later and there is another round of oil windfall, it is difficult to correct the earlier damage or distortions created by the initial or previous oil windfall. In some cases, the oil exporting country may be forced to adopt some form of structural adjustment program (SAP) to correct such distortions or imbalances. Some of these SAPs are painful and may increase the prevalence, depth and severity of poverty