Naira in Freefall: Exchange Rate Dips to 980/$ Amid Escalating FX Shortage
In a concerning development, the Nigerian naira’s value continued its downward spiral, hitting 980 naira to the US dollar in the parallel market on Wednesday. This marked a significant depreciation from the rate of 950 naira to the dollar just one week prior.
The decline in the naira’s value has been attributed by Bureau de Change operators to a growing scarcity of foreign currency in the market. Idris Musa, one of these operators, reported, “We bought and sold the naira today at rates of 965/$ and 980/$. The dollar is scarcely available.”
Yusuf Kareem, another BDC operator, expressed uncertainty about the future trajectory of the exchange rate, saying, “The dollar was sold for 980 today. We don’t know if it will continue to rise or if there’s potential for a reversal.”
However, there was a slight reprieve for the naira at the Investor & Exporter forex window on the FMDQ, where it appreciated slightly, closing at 770.71 naira to the dollar on Wednesday, up from 776.76 naira/$ on the previous day.
In response to the ongoing challenges faced by Bureaux De Change operators, the Association of Bureaux De Change Operators of Nigeria (ABCON) has called upon the Central Bank of Nigeria (CBN) to grant them digital autonomy in order to facilitate exchange rate convergence.
ABCON’s President, Dr. Aminu Gwadabe, issued a statement urging the CBN to grant a no-objection approval for BDCs to transition fully to digital operations in all their correspondences. Gwadabe emphasized that BDCs source foreign currencies from various channels, including private sources and the CBN window, as determined by the CBN for purposes such as funding Business Travel Allowance, Personal Travel Allowance, School Fees Payment abroad, Medical expenses, mortgage payments, personal home remittances, and subscriptions.
He further highlighted that ABCON has implemented training for compliance officers to ensure adherence to regulatory requirements, especially concerning the monthly reporting of results and the tracking of illicit capital flows through compliance. Additionally, Gwadabe stressed that BDCs are fully compliant with the reporting of suspicious transactions as directed by the Nigerian Financial Intelligence Unit (NFIU), CBN, and the Economic and Financial Crimes Commission (EFCC).
Overall, while the naira’s depreciation against the dollar remains a cause for concern, the push for digital autonomy among BDCs seeks to address some of the challenges faced by exchange rate operators in Nigeria’s financial landscape. The CBN’s response to these calls will likely play a crucial role in shaping the future of currency exchange in the country.