Worries as Naira Slumps Against US Dollar Again

VAM News Update

VAM News Update

Nigeria’s currency, the Naira, has further declined due to the increasing scarcity of the US Dollar.

VAM News learnt that the naira started trading at 1,175/$ at the parallel market and closed at 1,190/$ last Friday. This is a decrease from two weeks ago when the naira traded at 1,100/$ at the parallel market.

However, there was a slight appreciation in the naira’s value on the Investor & Exporter forex window. It sold at 808.28/$ at the close of trading on Friday, compared to 810.05/$ on Thursday, as reported by the FMDQ. Some Bureau de Change Operators mentioned to journalists that the scarcity of the dollar has made it difficult for them to provide forex to customers.

“On Friday, the price was 1,175/$, but we don’t even have it. It is not available right now,” A BDC operator, Jubril Mutiu, told The PUNCH in a recent interview.

Another BDC operator, Adamu Afeez, told newsmen that they are currently seeking individuals interested in selling to them. He acknowledged, however, that they currently lack the necessary funds to make purchases saying, “Without the required currency, we are unable to engage in any selling transactions.”

Another BDC operator, Ibrahim Abu, said, “We sold for 1,175/$ in the morning till afternoon on Friday. By 2 p.m., it was already selling for 1,190/$. It has been fluctuating. I don’t know what the rate will be on Monday.”

The naira had continued to maintain devaluation following the Central Bank of Nigeria’s (CBN’s) order to the lending institutions to allow the free flow of the country’s exchange rate in June.

Before floating the naira, it traded at the official market on the FMDQ at 471.67/$ and at the parallel market at 765/$ in June. Commenting on the unstable exchange rate, the President of the Association of Bureaux De Change Operators of Nigeria, Dr Aminu Gwadabe, in order to achieve a stable, strong, and virile exchange rate in Nigeria, it is imperative that the retail segment of the forex exchange market is fully participated in by the Bureau De Change (BDCs).

Gwadabe acknowledged the challenges facing the nation’s forex market and the depreciation of the naira, which he said requires the cooperation of all stakeholders.

He stressed that the BDCs, being licensed to operate at the retail end of the forex market, should be fully involved in providing lasting solutions to the ongoing volatility in the exchange rate.

“The continuous depreciation of the naira in official and parallel markets does not benefit the BDCs and the domestic economy. Hence, steps should be taken to reverse the trend and strengthen the local currency for maximum economic impact.,” Gwadabe was quoted to saying.

According to him, several measures by the CBN to bridge the exchange rate gaps showed genuine intentions of the regulator to entrench exchange rate stability, but getting the BDCs involved in the solution recipe would bring the desired results of a highly liquid market and stable rates.

Gwadabe said that, like every other market segment, the market’s illiquidity remained a significant concern to the BDC sector.

He said aside from illiquidity in the market, ABCON was unhappy with the unlicensed forex dealers who were at the centre of speculative activities and attracting a negative image to the sub-sector.