Banks are grappling with a dollar deficit following the Central Bank of Nigeria’s (CBN) decision to cut their foreign exchange allocations. Several bank representatives expressed their challenges in satisfying forex requirements for purposes like school fees and personal travel. A senior tier-1 bank official mentioned the widening gap between forex demand and supply, hopeful for CBN’s intervention.
The CBN, addressing the naira’s devaluation, has promised countermeasures. The currency witnessed a surge in the parallel market following the bank’s declaration to combat its continuous depreciation. CBN’s Acting Governor, Folashodun Shonubi, after a meeting with President Bola Tinubu, opined that the fluctuations aren’t entirely economy-driven, pointing at speculative demand.
Conversely, Bureau de Change Operators noted the exchange rate shift from 956/$ to 925/$ within a day. One operator mentioned anticipations of more dollar influx into the economy, which they’re still awaiting.
In the Investors & Exporters window, the naira’s trading initiated at 785.89/$, peaking at 799.90/$, then settling at 774.77/$.
Dr. Sam Nzekwe, a former President of the Association of National Accountants of Nigeria, expressed skepticism over the CBN’s approach’s sustainability. He highlighted the dwindling confidence in the naira and recommended fostering a more productive economy rather than heavy imports.
It’s essential to note that the CBN, in July 2021, stopped dollar allocations to BDCs, delegating the responsibility to Deposit Money Banks instead.
There’s also buzz regarding a potential crackdown on Bureau De Change operators. Insiders revealed that the Economic and Financial Crimes Commission (EFCC) might target currency speculators exerting undue pressure on the naira. A source emphasized that these rates are not market-based but speculative, justifying the government’s intent to step in. Confirmation from EFCC was pending at the time of reporting.
