Forex Crisis: ‘$2.25bn Afreximbank Disbursement Inadequate’

The Association of Bureau De Change Operators of Nigeria (ABCON), has stressed that the $2.2 billion released by the African Import Export Bank (Afrexim bank), is not enough to stimulate the market in view of the persistent foreign exchange crisis in the country.

National president of ABCON,  Aminu Gwadabe, lamented that due to the depreciation in the value of naira, some Nigerians are now keeping their savings in the United States dollars.

Disclosing this to our Correspondent yesterday, Gwadabe stated that there is the need for the forex market to be liquid in order to stop the trend.

According to him, “For now, it’s a difficult situation which is also creating panic in the market because the value of the naira is eroding and because of that, a lot of people prefer to keep their savings in dollars,” he disclosed.

Speaking on the $2.2 billion crude oil prepayment facility, Gwadabe said, “the $2.2billion Afrexim bank crude prepayment facility is a welcome development but I don’t think it’s enough to stimulate the market considering the situation because if we put $2.2billion into the market, we have been seeing demand in the I&E window alone ranging from $150million to $250million daily so, in 10 days, the $2.2billion will be exhausted. Speculators will speculate and we will run it out between 10 to 15 days.”

He, however, called for a paradigm shift in the supply of dollars into the FX market, “we need to have a paradigm shift in terms of supply, it’s very important and should be immediate. We have been talking about diaspora remittances and as of last year we recorded over $20billion US dollars.”

Corroborating Gwadabe, a financial analyst, Ayokunle Olubunmi, said Nigerians are buying and keeping their earnings in foreign exchange in order to meet future financial obligations.

He said, “It’s a no brainer, let’s think about it if you look at the trend of the naira this year alone, there will be devaluation and if we look at the level of devaluation so far and people who have dollar needs in the couple of months or years, for instance, may be buying and keeping it.

“For instance, anyone going on vacation in August, it will be very profitable for the person to borrow money now to buy dollars and keep it till he needs it. He may even be paying interest on it. I am telling you the way of thinking in Nigeria.

“I even know that his child will be schooling abroad in the next 5 years and the person is buying dollars and keeping them as he’s getting the money little by little for the obligations he wants to meet in the future,”  Olubunmi stated.