The naira persisted in its recent decline against the United States dollar in the unofficial market at the weekend, dropping to N251 per dollar from N247 last Thursday and N222 in the same period last month, according to currency traders.
Forex dealers attributed the naira’s fall to the Central Bank of Nigeria’s (CBN) suspension of dollar sales to some Bureaux De Change (BDCs) last Wednesday, a development they said, resulted in shortage of foreign exchange in the market.
The acting President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, disclosed that 1,599 out of a total of 2,818 BDC operators were denied their weekly allocation of $30,000 by the apex bank for not submitting documentation on previous dollar purchases.
He predicted that the naira would weaken further this week unless the CBN rescinded its decision not to sell dollars to BDCs that don’t submit the necessary documentation.
Financial analysts point out that most BDCs have not been able to comply with the CBN’s directive last month to include the Bank Verification Numbers (BVN) of forex end users in the returns that they are required to submit to the regulator.
ABCON’s boss, Gwadabe, had at a recent press briefing appealed to the CBN to increase the level of awareness on the BVN policy.
He stressed that the main challenge of implementing the BVN as a criterion for foreign exchange transactions at the BDC segment was ignorance on the part of customers.
He said: “Though the BVN policy applies to both banks and BDCs, the reality is that, an individual would willingly supply his or her BVN to a bank, and be reluctant to do so to a BDC, except he has been adequately informed that it is a CBN policy.”
According to analysts, availability of dollars in the BDC segment of the foreign exchange market usually has an impact on the naira’s exchange rate on the parallel (unofficial) market. They argue that although the naira-dollar exchange rate had remained largely stable at between N197 and N199/dollar on the official interbank market since February, foreign investors would be unwilling to invest in the country due to the disparity in the parallel and official markets rates of the naira.
It will be recalled that in a bid to conserve foreign reserves impacted by the slump in oil prices, the CBN fixed the naira at 198-199 per dollar in February and imposed forex restrictions on the importation of 41 items, such as rice, cement, vegetable oil, wheelbarrows and glass.
However, foreign investors opposed the move and called for the naira to be devalued. They have sold bonds and stocks this year on expectation of a devaluation, which would cause losses on their holdings in foreign-currency terms.