Headline
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.”
The Minister of Justice, Lateef Fagbemi, SAN has warned against obstructing the Economic and Financial Crimes Commission (EFCC) from carrying out its lawful duty .
Fagbemi’s warning is contained in a statement in Abuja.
“This is a matter of very grave concern, it is now beyond doubt that the EFCC is given power by the law to invite any person of interest to interact with them in the course of their investigations into any matter, regardless of status.
“Therefore, the least that we can all do when invited, is not to put any obstruction in the way of EFCC, but to honourably answer their invitation.
“A situation where public officials who are themselves subject of protection by law enforcement agents will set up a stratagem of obstruction to the civil and commendable efforts of the EFCC to perform its duty is to say the least, insufferably disquieting’’.
He added that running away from the law will not resolve issues at stake but only exacerbate them.
“Nigeria has a vibrant judicial system that is capable of protecting everyone who follows the rule of law in seeking protection.
“I therefore encourage anyone who has been invited by the EFCC or any other agency to immediately toe the path of decency and civility by honouring such invitation instead of embarking on a temporising self-help and escapism.
“This can only put our country in bad light before the rest of the world’’.
He said institutions of state should be allowed to function effectively and efficiently.
“I stand for the rule of law and will promptly call EFCC, and indeed any other agency to order when there is an indication of any transgressions of the fundamental rights of any Nigerian by any of the agencies’’.
NAN reports that the EFCC had on Wednesday warned members of the public that it was a criminal offence to obstruct officers of the Commission from carrying out their lawful duties.
Section 38(2)(a(b) of the EFCC Establishment Act makes it an offence to prevent officers of the Commission from carrying out their lawful duties. Culprits risk a jail term of not less than five years.
The warning , the EFCC said, became necessary against the background of the increasing tendency by persons and groups under investigation by the Commission to take the laws into their hands by recruiting thugs to obstruct lawful operations of the EFCC.
On several occasions, the anti graft agency said, operatives of the Commission have had to exercise utmost restraint in the face of such provocation to avoid a breakdown of law and order.
Some unknown gunmen have kidnapped Joshua Rogers, the ChannelsTV reporter in Port-Harcourt, the Rivers State capital.
Politics Nigeria learnt that Rogers was picked up close to his residence at Rumuosi in Port Harcourt and to an unknown destination by the gunmen around 9pm on Thursday, April 11.
The reporter was driving his official ChannelsTV branded car when the hoodlums accosted, pointed a gun at him and took him away in the same vehicle.
Rogers was said to be returning from his official assignment in Government House after a trip to Andoni for a government event when the incident happened.
Already, the gunmen were said to have contacted his wife and demanded a N30million ransom for bis release.
His cameraman confirmed the incident and appealed to his abductors to set him free unconditionally.
Woman killed while crossing road in Anambra
LASG’s maize palliative impactful, says poultry association chair
Fagbemi warns against obstructing EFCC from performing its lawful duty
BDCs now buying dollar at ₦980 — ABCON President
Osun Poly Student, Olanrewaju Olatona killed by hit-and-run one-way driver
Seplat Energy celebrates a decade of Dual Listing with Bell Ringing Ceremony at Nigerian Stock Exchange
3 teens arrested in Germany for allegedly plotting terror attack
Breaking…Naira abuse: Court sentences Bobrisky to 6 months in custody
Lagos Court Grants Emefiele N50m Bail
