The Naira fell to N818/$1 at the parallel market on Monday in Abuja and N815 in Lagos as it continued to lose its value.
The naira is currently under high selling pressure in the black market following CBN’s announcement that the newly redesigned naira notes would start circulating in the economy from December 15, 2022.
Since the apex bank made this announcement last week, the naira has fallen from its initial record low of N765/$1, losing over N53 in five days, further piling pressure on the local currency.
One of our correspondents who visited the popular Bureau De Change hub at Wuse Zone 4, Abuja, reports that several customers came looking for dollars but had difficulty accessing it.
Some offices visited included AA Funtua BDC, Mourison BDC, Wireless Resources BDC, Bani Mbaka BDC, Amfani Girma BDC and others.
Our correspondent, who also posed as a customer to purchase $10,000, couldn’t find any BDC with up to that amount of dollars to sell. Some BDCs said they didn’t even have $5,000 to sell.
Some of the operators confirmed a spike in demand following the CBN’s announcement that it would introduce new currencies.
Operators who spoke to Daily Trust said they’ve seen an unusual demand and mop-up in the past few days.
One of the operators who identified himself as Ismailia Yusuf said the US dollar was very scarce. He also said the EFCC had visited the BDCs to scavenge for those offloading naira for dollars.
He couldn’t confirm if arrests were made but he did say operators were careful of exchanging huge amounts of naira for dollars.
It was not immediately clear if the scarcity is also a result of operators hoarding dollars to create more scarcity and increase profit.
Another operator, Nura, said that before the CBN’s announcement, they could do an exchange for up to $500,000 and sometimes $1m, but it’s no longer possible.
‘Customers rarely take dollars for sale’
Nura said even the walk-in customers rarely take dollars for sale, which might have impacted the scarcity as well.
He also hinted that the EFCC was inviting some BDCs to the homes of politically exposed individuals to strategize how to secure forex.
“Some people with huge cash can invite BDCs operators to their homes to buy dollars and that might already be happening,” he said.
A survey of some of the black markets in Lagos revealed that bureau de change operators bought dollars for between N790 and N800 and sold them for between N795 and N805.
An operator at Allen Roundabout in Lagos, Ismail Muhammed said dollars were still selling for less than N800/$1 as against the speculated N815.
“I buy for between N780 and N785 while I sell for between N785 and N790. The dollar has not reached N800. It is all speculation,” he said.
Another operator, Alhaji Nafiu Isah, said the dollar was rising and might reach N820 before the end of the week.
“I buy for N800 and sell for N805 for now but it is on the rise and might get to N820 or N830 very soon,” he said.
Alhaji Abdullahi Olugbede said he would buy for as high as N807 if the volume exceeded $4,000.
Efforts to speak to the leadership of the Association of Bureaux De Change of Nigeria (ABCON) on the depreciation of the naira proved abortive as they declined to comment.
It would be recalled that the CBN barred the sale of Forex to BDCs operators across the country in July 2021. The CBN said the parallel market had become a conduit for illicit forex flows and graft.
There was no comment from the CBN on the recent development.
How Naira lost 28% since January
According to Nairametrics’ FX tracker, the naira has lost over 28% of its value between January and October 2022 due to increased demand for the dollar amidst sustained dollar scarcity. The naira started the year at N565 to a dollar.
The exchange rate at the Investors and Exporters window, where FX is traded officially, has also seen some systematic devaluation so far this year, moving from an average of N416/$1 last year to as high as N444/$1 as FX supply continues to dwindle in recent times. Data tracked by Nairalytics showed that $362.7 million was traded at the official FX market last week, marking a decline from $425.3 million recorded in the previous week. This was even significantly lower than the average of $500 and $1 billion weekly trades recorded earlier in the year.
Naira failing as a store of value – Experts
An economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the recent depreciation of the naira was fuelled by those who had huge cash in local currency that they wanted to hide away as a result of the redesign of currency notes by CBN and those who wanted to move their wealth away from the naira to a more stable currency.
“The rise is a result of the announcement by the CBN to redesign currency notes and the fact that we have people who have huge cash who might not be comfortable taking them to the bank because EFCC will be watching out. However, all the current policies of the government, especially by the CBN, have been affecting confidence in the naira.
“Naira has been failing in one of its major functions as money, which is serving as a store of value, because when a currency continues to depreciate due to inflation, the tendency is that people will move to a more stable currency,” he said.
