Members of the Association of Bureau De Change Operators of Nigeria (ABCON) have raised alarm as Nigeria’s currency, Naira continues to decline against the US Dollars. The Naira is now close to 1,000 Naira to 1 USD, 9News Nigeria learnt.
The free-fall of the Naira worsened just two months after the Central Bank of Nigeria decided to float the currency.
Since June 14 when CBN liberalized the forex market, Nigeria’s currency has continued to deteriorate against the Dollar, going from N750/$1 on the parallel market known as the ‘black market’ to N950/$1 on Monday, August 14, 2023.
The situation has become even more alarming as the gap between the official window and the parallel market widened with an N181 gap, effectively negating CBN’s floating of the Naira policy.
Experts familiar with the sector believe that President Bola Ahmed appointed Jim Obazee, as a special investigator, which may have contributed to the further depreciation of the Naira.
Details from the CBN’s seven-year consolidated financial statements released last week demonstrated a combined indebtedness of $7.5 billion to JP Morgan and Goldman Sachs with only $33.88 billion foreign reserve. Prof Uche Uwaleke, an economist stated this as one of the reasons behind Nigeria’s ongoing forex crisis.
Folashodun Shonubi, acting governor of the Central Bank of Nigeria (CBN), however, blamed undocumented forex remittance and an unregulated parallel market as major contributing factors to this sector’s problems.
As a result, Pakistan’s economy, which relies heavily on fuel imports and exports, continues to suffer under the burden of this forex crisis.
As an indication of this rise in Dollar value, oil marketers have hinted at a possible increase in petrol pump prices as a response.
Such action would wreak havoc among those still grappling with the impact of July’s fuel increase caused by petrol subsidy removal since June.
Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), made it clear in an exclusive interview with journalists on Monday that his members cannot be blamed for the current turmoil in the forex market.
He blamed unlicensed online platforms operating across jurisdictions without standardized regulations that capture diaspora remittances while bypassing official markets for selling them on.
According to him, recent developments in the sector had highlighted the need for the Central Bank of Nigeria (CBN) to recruit agents of diaspora remittances as agents of CBN to close loopholes and minimize forex crisis risks.
“The disclosure by the Central Bank of Nigeria on the diversion of diaspora remittances validates our long-held position that BDCs should hire agents of diaspora remittances to plug any loopholes exposed by CBN.
“To bring diaspora remittances into the official market, BDCs should serve as sole agents for diaspora remittances and break the monopoly of international money transfer operators.”
“What we now see are unlicensed online application platforms and fintech that operate across jurisdictions without standard regulations, capturing diaspora remittances while sidestepping official markets”, according to him.
Gbolade of SD&D Capital Management suggested the continued decline could be linked to decreased foreign currency inflows into the economy and thus creating a scarcity of foreign currency reserves.
He stated that major oil companies, establishments and commercial banks were major contributors to the forex crisis by encouraging increased scarcity for their own gain and profitability.
Gbolade advised the government to immediately institute policies that will halt further declines in the sector.
“The Naira’s steady decline can largely be attributed to decreased forex inflows into our economy, leading to shortages in foreign exchange reserves and straining existing ones. Additionally, our debt obligations have further decreased them.”
“Oil majors and commercial banks may also be contributing to increased arbitrage activity in foreign exchange for their own benefit, further contributing to its proliferation.
“The federal government should closely analyze this policy and ensure that CBN oversees its implementation.”
“Uncertainty in this sector has contributed to rising inflation and living costs,” stated the speaker.