Naira depreciates further, exchanges at N1,450/$ in black market

The Naira’s bad luck continued yesterday as speculation and hoarding reappeared, leading to more losses in the official and underground markets. Some Bureaux De Change, or BDCs, also decided to withdraw from the Central Bank of Nigeria’s (CBN) dollar sales programme.

Vanguard has also learned that the Naira further depreciated yesterday, from N1,415 per dollar on Tuesday to N1,435 per dollar in the parallel market. This was in addition to the Naira depreciating to N1,421.06 per dollar in the Nigerian Foreign Exchange Market, or NAFEM, despite the ongoing nationwide raids and arrests of street currency vendors.

The indicative exchange rate for NAFEM dropped to N1,421.06 per dollar from N1,416.57 per dollar on Tuesday, according to data from FMDQ, suggesting an N4.49 devaluation of the naira.

Consequently, the margin between the parallel market and NAFEM rates widened to N13.94 per dollar from N1.57 per dollar on Tuesday.

Dollar sales to BDCs

In an attempt to regain control over the retail forex market, the CBN started selling dollars to BDCs again in February. Three editions of the dollar have been held by the apex bank since then. In the previous edition, the CBN directed BDCs to sell at a maximum margin of 1.5% while offering to sell $10,000 per BDC.

However, BDC operators complained that the CBN’s currency disbursement is too delayed, requiring three to four weeks from the time they make payment until the dollars are actually distributed to them.

According to credible information obtained by Opinion Nigeria, certain BDCs have requested a refund of their Naira payment from the CBN due to the delay and unpredictability in the foreign exchange market.

Top BDC operators who confirmed this development to Vanguard under the condition of anonymity said that some of the BDCs that asked for refunds have gotten their money.

Speaking to Vanguard on condition of anonymity, the Chief Executive of a BDC said, “I think the CBN is overwhelmed. You pay money and it takes one month for you to collect $10,000. It is over a month now since they intervened and they have not intervened again.

“Even the last one that they did some BDCs are just collecting the dollars. Some are even saying they should return their money. They are asking for a refund because there are many challenges. Some have paid but their name is appearing in another location which makes it impossible to collect the dollars. Some are getting their refund but it is a very slow pace too.”

Also speaking on condition of anonymity, another BDC operator said, “There is no supply. The CBN supply is slow. They sell one tranche for one month. It is too low. If they don’t have the money they should tell us we don’t have the money.”

Speculation reemerges
Vanguard investigations also revealed the reemergence of speculation and hoarding in the forex market due to the steady depreciation of the Naira in the last three weeks.

Speaking anonymously, a BDC operator said, “You know people are still doubtful. A lot of people now at any opportunity, buy dollars and keep, thinking that the rate will go up again. So speculation and hoarding are still happening.

“Before when people are scared, they bring out their dollars to sell. But now nobody is doing that. Supply is not coming into the market. There is no certainty about the frequency and volume of intervention from CBN. And this further encourages speculation and hoarding.”

Efforts for the CBN to respond to the above developments proved abortive as the Director, of Corporate Communication, CBN, Mrs Hakama Sidi-Ali, did not respond to calls and SMS and WhatsApp messages from Vanguard.