Currency dealers and hawkers are currently making stupendous profits from the sale of scarce foreign exchange, while the Central Bank of Nigeria watches helplessly.
Findings revealed that despite the scarcity of foreign exchange in the economy, billions of dollars are lying fallow with the Deposit Money Banks, Bureux De Change operators and currency hawkers waiting to be sold at parallel market rates to prospective buyers.
Parts of the forex are currently being sold for between N260 and N263 per dollar to various categories of buyers, according to top bank officials and currency dealers.
For intending travellers, Personal Business Allowance and Business Travel Allowance are being sold at the parallel market rate between 260 and 263, instead of the official rate of 199 plus a 3.5 per cent commission prescribed by the Central Bank of Nigeria.
It was learnt that currency dealers, mainly commercial banks, the BDCs and foreign exchange hawkers, were having a field day making bumper profits from the sale of forex with the CBN watching helplessly.
“If you want $20m now at the rate of N263 to a dollar, I will get it for you from the bank,” a currency dealer revealed in Lagos at the weekend.
“The forex is there but it won’t go for anything less than the parallel market rate; banks have it, the BDCs also have it,” the dealer added.
Banks and the BDCs are meant to sell the BTA and the PTA to intending travellers abroad with valid documents at the official rate of 199 plus 3.5 per cent commission.
This is expected to bring the resale value or the dollar exchange rate to N205.9. Instead of this amount, prescribed by the CBN, the BDCs and banks are selling the PTA and the BTA to thousands of intending travellers at rates above N260.
The economy is left to suffer as the currency speculators battle for the control of the naira-dollar exchange rate with the central bank.
The CBN has come up with various measures aimed at curbing the activities of currency speculators but it appears the regulator is losing a lot of ground as the battle to save the naira gets bloodier by the day.
Already, there exists a huge gap between the naira-dollar exchange rate at the official market and the parallel market.
In December 2015, the naira dipped to N280 against the dollar at the parallel market. Compared with the 199 at the official market, the spread is N81. This represents a 40.7 per cent gap.
This to them, accounts mainly for the activities of speculators and rent-seekers, which they say have overwhelmed the CBN.
Across the world, the battle between the regulators and currency speculators is usually laced with a lot of intrigues with a resultant huge casualty.
In Nigeria, the casualties appear to have transcended the limits as the economy and masses are now at the mercy of currency speculators.
Several intending travellers are left at the mercy of speculators as most of the banks now claim they don’t have the BTA and PTA.
But the CBN through its Director, Corporate Communications, Mr. Ibrahim Mu’azu, said the bank was ready to withdraw the license of any BDC or bank found to be engaged in any illegal activity.
He said that banks and the BDCs were allowed to charge only 3.5 per cent commission on the amount bought.
Muazu said, “We monitor them. They render returns to us and through that, we can know. But don’t forget that they get dollar through autonomous source. And that depends on the amount they buy there. From the records made available to us, they only put the required commission as the margin on it. The situation is being monitored closely and we will never allow anybody to tamper with the nation’s external reserves.”
Economic and financial experts noted that the restriction/ban placed by banks on the use of naira debit cards abroad had worsened matters for many Nigerians.
The experts have advised the CBN to look at the possibility of devaluing the naira as a way out of the problem of forex scarcity said to be at the root of the ban on the cards’ usage overseas by the banks.
The Head, Investment and Research, Afrinvest West Africa, Mr. Ayodeji Ebo, said the CBN needed to reverse its administrative controls and restrictions, which had led to the scarcity of dollars.
He said the CBN would need to rather devalue the naira and let the economy bounce back by attracting foreign investors, while adding that the ban on payment cards’ usage abroad would inflict heavy pains on Nigerians overseas.
Also, a renowned economist and Managing Director, Financial Derivatives Limited, Mr. Bismarck Rewane, has urged the CBN to make forex more readily available by devaluing the local currency.
He said, “The moves by the banks are obvious signs of rationing and restriction by the CBN. I am not surprised. The solution is to let the exchange rate change.
“How long can we hold it? The forex is not there. So, the only thing is to allow the exchange rate to go. I think a combination of devaluation of the naira and some restrictions will save the situation.”