Naira faces renewed pressure as FX hoarding increases

Naira exchange rates June 2022

As ABCON urges FX users to patronise registered BDC operators

The foreign exchange crisis in the country may worsen soon, as anti-market schemes, speculation and hoarding, have taken firmer hold in the market, The Guardian has learnt.

At the weekend, the naira slipped further trading at between N494/$ and N498/$ at the black market. The dollar surged last week following the Nigerian Autonomous Foreign Exchange (NAFEX) as the default official rate against the scrapped N379/$ official rate. Last week, the NAFEX (or investors’ and exporters’ (I & E), a pseudo market rate, closed at N412/$.

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The panic arising from the switch and the erroneous reports that the naira has been devalued has worsened speculative trading and hoarding of FX by small hoarders. These, operators have suggested, could worsen the illiquidity level in the coming days.

But the Association of Bureaux De Change Operators of Nigeria (ABCON) has dismissed the panic, advising FX users to patronise only CBN-licenced bureaux de change (BDCs) to get dollars at the approved rate.

In a statement issued at the weekend, ABCON President, Dr. Aminu Gwadabe, said only CBN-licenced BDCs operate within regulatory guidelines of selling dollars at an approved rate as well as international best practices.

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He said that parallel market activities have, for years, become major drivers of the exchange rates and control over such transactions have become burdensome.

He said that forex speculators are capitalising on the state of the foreign exchange market and the naira to sell dollars above CBN-approved margin.

Gwadabe said that CBN-licenced BDCs are not selling dollars to end-users above the N2 per dollar margin set by the regulator to protect the naira against foreign exchange speculators and ensure exchange rate stability.

The ABCON boss has denied reports claiming that the CBN-licenced BDC operators bought dollars at N393 to a dollar and sold at N494 to a dollar, representing N101 margin.

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A newspaper had reported at the weekend that BDCs get dollars at N393/$ but sell at N494/$, a report attributed to an anonymous bank source.

The ABCON president described the report as “factually inaccurate assertions as commercial banks do not fund BDCs.”
Gwadabe said while its members comply with the CBN’s regulatory requirement of a predetermined weekly transaction margin, there was no evidence to support the “spurious claim” in the report.


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