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Forex Scarcity Persists As CBN Resumes Intervention



There are indications that banks are ignoring the Central Bank of Nigeria, CBN, directive that they should grant their customers unfettered withdrawal of foreign currencies from domiciliary accounts.


Meanwhile, Nigeria’s foreign exchange market has recorded a drastic change following the market reforms introduced by the CBN, previous week.


Findings show that the banks are still restricting the amount of foreign currency that customers can withdraw from their accounts saying the currencies are still scarce.

Dealers and the customers lamented that the situation has impeded supply of foreign currency to the market.

But the drastic change in both structure and operations of the foreign exchange market, has resulted in exchange rate convergence by default as the US dollar traded within narrow band across the three segments of the market, namely, the Investors and Exporters (I&E) window, the Bureau De Changes (BDCs) and the black market.

However, for the first time, the exchange rate in the official market (I&E) surpassed what obtained in the black market.

Meanwhile, dealers across all the segments are facing acute scarcity of the US dollars while CBN resumed supply of the foreign currency last week, though at a very low volume.

Findings by Financial Vanguard show that Naira last week depreciated further to N770.17 per dollar in the I&E window, with currency dealers projecting further deterioration of the dollar scarcity, a situation which may propel further depreciation of the local currency this week.

According to data from FMDQ, the I&E window exchange rate closed at N770.17 per dollar on Friday. This represents 16.2 per cent week-on-week, WoW, depreciation of the Naira when compared with the closing rate of N663.04 per dollar the previous week.

The Naira also depreciated in the parallel market, where the dollar traded within the range of N765 and N770 per dollar, at the close of business, up from N759 per dollar the previous week.

The Naira has been on the downward trend in both the official market and parallel market, since the Central Bank of Nigeria, CBN announced, “Operational Changes to the Foreign Exchange Market,” including elimination of multiple exchange rates/segments and re-introduction of willing seller, willing buyer model in the I&E window.

Since the changes were announced the previous week, the Naira has depreciated by 63 per cent in the I&E window, from N471.67 per dollar on Tuesday June 13th.

During the same period, the Naira also depreciated by 20 per cent in the parallel market from N755 per dollar.

Dollar scarcity

Financial Vanguard findings from currency dealers showed that the depreciation is driven by acute dollar scarcity in both I&E and the parallel market.

A banker and forex market analyst who spoke on condition of anonymity said, “Though the CBN intervened in the I&E window on Thursday, the market is still very short, in terms of supply. The volume of sales by the CBN was not much. The highest volume sold per buyer was $5 million dollars. Some others got $2.5 million while others got between $250,000 and $1 million.

“They, however, sold only to people that bided at an exchange rate above $761 per dollar.

“After the CBN’s sales, some international organisations also sold but the volume was small compared to the demand, especially given the backlog of matured obligations. I will say the market is still evolving and going through a price discovery process. The volatility will continue with the Naira further depreciating, depending on dollar supply coming into the I&E window.

“The true exchange rate will only emerge when all the backlog of dollar demand has been satisfied.”

Operators react

Bureaux De Change, BDC, operators and parallel market operators who spoke to Financial Vanguard lamented the dollar scarcity in the market, noting that banks are yet to comply with the directive of the CBN that they should allow customers have unfettered access to funds in their domiciliary accounts.

Mallam Ahmed Yunusa, a black market trader in Lagos, said: “The market has been very busy since last week after the CBN eased its restrictions on forex trading in banks.

“A dollar was sold for N770 today (last Friday) because I bought a dollar for N765 making just N5 profit. However, over the week, the dollar has been traded at N745 to N770.

“The reason for this is because most of our customers who visited the banks complained the demand for dollars is higher than the supply and that the banks don’t have enough dollars to go round hence the rise in the price for the willing buyers.

“Most traders at the parallel market decided to sell a bit less or higher within the price range of banks to keep our customers as the competition becomes tougher.

“I see a continuous rise in the volume of demand for the dollar as we approach the end of the year and an appreciation of the Naira to N500 or N600 per dollar in the near term if dollar supply increases.”

On his part, Mallam Umoru Mohammed, another black market trader in Lagos, said: “The dollar has been trading since last week from N740 to N770. Today the dollar was traded at N750.

“Here in Ikorodu, businesses have been dull as not many sold dollars to us hence I was not able to get supply of dollars due to the higher demand of dollars than supply.

“I see the Naira depreciating to N800 per dollar due to the inability of traders to meet the demands of buyers as we approach the remaining half of the year but if there is more forex inflows the reverse will be the case.”

Similarly, Garuba Hassan, a parallel market operator also in Lagos, said: “Today (last Friday) we are buying at N750 per dollar, but yesterday the rate was between N760 and N770 per dollar. If you go to the banks, they will tell you no dollars. You will have to visit about three banks before you can get the dollars, and this is affecting the market and the rate.”

Speaking on condition of anonymity, a Bureaux De Change, BDC, operator, and executive member of Association of Bureaux De Change Operators of Nigeria, ABCON, said: “There is nothing like BDC exchange rate because the CBN is not selling dollars to BDCs. We all compete with the parallel market operators for dollars and as such we have to ensure our rates match theirs.

“The situation in the market now is that demand is high but dollars are still scarce because there is no supply.

“People that want to withdraw dollars from their domiciliary account are not able to do so. The banks keep telling them there are no dollars.

“But I believe the Naira will appreciate in the coming weeks. The sharp depreciation of the Naira in the I&E window, I believe, is to encourage investors and Nigerians in Diaspora to bring in their dollars.

“Once this happens, the exchange rate in both I&E and the parallel market will gradually go down.”


Breaking news: Minimum Wage: Labour rejects FG’s N54,000 offer



The organised labour has rejected the Federal Government N54,000 new minimum wage proposal.


According to reliable source, the meeting on the ongoing negotiations on new minimum wage has been adjourned till Wednesday after the organised labour.


Media report has it that the Federal Government upped its offer from its earlier proposed N48,000 to N54,000.

Tuesday’s meeting came as a result of the walkout staged by members of the organised labour following the proposal of N48,000 as minimum wage by the Federal Government during last week’s meeting.

During that meeting, the OPS had also proposed N54,000 while labour insisted on its N615,000 living wage demand.

Our correspondent who spoke to sources who attended the follow-up meeting on Tuesday learnt that the Federal Government upped its offer from N48,000 to N54,000.

“Well, during the meeting, the government increased its offer from N48,000 to N54,000. However, labour rejected that offer and the meeting has been adjourned till Wednesday,” a source who asked not to be named said.

When asked if the government’s side was showing any sign of seriousness, the labour leader said, “No seriousness at all. Even state governors did not show up. Those who represented them, like Bauchi and Niger states, did not have the mandates to speak on their behalf.

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Real Madrid’s goalkeeper shares recovery insights after two injuries



Real Madrid goalkeeper Thibaut Courtois has opened up about his recovery journey following two serious knee injuries.


Courtois said, “In August, I cried because the worst thing that can happen to you in football is a cruciate ligament injury. When I returned home, I said that I was going to work hard and come back stronger. That was my idea from the beginning: to stay positive, fight, never give up, and push my limits.


“Many thought my season was over, but I knew it wasn’t,” Courtois told Marca.

Recall that for most of the current season, Courtois missed out due to two injuries: a cruciate ligament tear and a meniscus injury. In his absence, first-choice goalkeeper was Chelsea’s loanee Kepa Arrizabalaga, and later, he faced competition from Andriy Lunin.

Upon his return, Courtois played in 3 La Liga matches, keeping clean sheets in all of them. In the last game against Alaves, the Belgian made 10 saves.

Earlier, it was reported that Courtois’ recovery from injury will be featured in a documentary series.

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