The decision by the Central Bank of Nigeria (CBN) to stop sales of dollar to Bureau de Change (BDC) operators has started to manifest its multiplier effect as LEADERSHIP findings yesterday showed that the BDCs are now cash trapped, resulting in a marginal increase in the price of dollar at the parallel market.
CBN had announced that it would henceforth discontinue the sale of foreign exchange to BDC operators, saying they have become a conduit for illegal financial flows working with corrupt people to conduct money laundering in Nigeria.
The value of the Nigerian currency depreciated by more than 3.3 per cent within a day, in reaction to the decision of the apex bank.
From N505 which it had been selling for at the black market since the beginning of the week, the value of the naira went down sharply by N17 to N522 to a dollar and in some parts of the country as low as N525 to the dollar.
Currency traders said there has been increased demand for the greenback as speculators moved in to take position ahead of anticipated devaluation.
Other major currencies also appreciated against the naira, although not as much as the dollar. Compared to N703 which the British pound was exchanged for on Tuesday, it sold for N710 yesterday afternoon while the euro sold for N600 as against N592 on Tuesday.
In some places in Lagos, the value of the naira depreciated to as low as N720 per to the British pound.
Checks by our reporters with some BDC operators in Abuja yesterday showed that most of them have also resorted to hoarding the dollar for fear that it would further appreciate on the back of the expected scarcity of the currency from the official window, resulting in upward review of the price of dollar at the market.
The price of dollars increased significantly from N505/$1 prior to the announcement on Tuesday to between N516 and N520/$1, in the Federal Capital Territory, as of yesterday.
A BDC operator at Wuse, Alhaji Ibrahim Tanimu, during an interview with our correspondent, said: “I don’t even have a dollar today. It has been exhausted.” He added that dollars are now scarce in the market. Another dealer, who gave his name as Idris Abubakar, said he does not sell dollars for less than 520.
The scarcity of the currency may be the result of panic buying and selling, our reporter was told. “People have dollars. Anytime you need dollars we have, but it is more expensive now,” he said.
In Benin City, the Edo State capital, operators at the popular forex market on Sokponba Road yesterday frowned at the announcement by the CBN even as some of them faulted allegation by the apex bank that BDC operators aid corrupt Nigerians to launder money.
Some of the operators, Collins Omosege and Mallam Adamu Haruna, told our correspondent that the commercial banks will take advantage of the decision and start hoarding forex, thereby leading to artificial scarcity of the currency, even as they noted that government’s decision was not only hasty and harsh but of negative economic consequences.
Omosege expressed fears that the commercial banks may not be ready to attend to the volume of requests for forex by customers.
“This is an economy that is import-driven and because of that we need dollars. What I will advise is that we have to find a common ground to regulate these things. Yes, I understand what the federal government is trying to do but the main problem is with the banks.
“It is easier to get dollars at the black market.
In Port Harcourt yesterday, a BDC operator who identified himself as Umar, said: “The ban is like taking food out of our mouth. So, what do they want us to be doing now? BDC has been our source of livelihood for years.”