Investigations revealed that from N260 per dollar at the close of business on Tuesday, the parallel market exchange rate rose sharply to N270 per dollar in Lagos, indicating N10 depreciation.
But in Abuja, the parallel market exchange rate rose from
N262 per dollar to close at N273 per dollar, indicating N11 depreciation.
BDC operators, who confirmed this development to Vanguard, said the sharp depreciation was due to further reduction in the weekly dollar sales by the CBN.
President, Association of Bureaux de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, told Vanguard that though the CBN increased the number of BDCs it sold dollars to from 1,170 last week to 2,270 this week, it however reduced the amount of dollars sold to each BDC by 60 per cent from $30,000 to $10,000.
According to Mr. Harrison Owoh, Chief Executive Officer, H.J Trust BDC, the decision of the CBN aggravated the demand situation in the market.
He said: “There is huge volume of unsatisfied demand in the market. We had to turn down lots of request for dollars because there is no dollars to sell to them,” he told Vanguard.
An Abuja-based BDC operator, who spoke on condition of anonymity told Vanguard: “The dollar is selling at N273 in Abuja this evening. It was N262 in the morning. We are surprised at the pace of depreciation, because we can’t explain why it just went up by such margin in one day.”
Speculative reaction
On this development, Director, Corporate Communications, Central Bank of Nigeria (CBN), Ibrahim Mu’azu, said the reduction in dollar sales to BDCs is part of the demand management of the CBN in the foreign exchange market.
He said the depreciation of the naira to N270 per dollar is a speculative reaction to the development.
According to him, “the rate is not sustainable. This is because there are still other windows for end users to buy dollars at lower rate. They can buy dollars at the official rate from the deposit money banks, and from Travelex inside the airport. So by the time people know about these alternatives, the reaction in the parallel market, and the exchange rate will calm down.”
Further investigations reveal that the naira also depreciated heavily against the British pounds. From N365 per pounds at the close of business last week, the parallel market exchange rate rose sharply to N385 per pounds at the close of business yesterday.
In addition to the reduction in dollar sales by CBN, foreign exchange supply from autonomous sources is thinning due to hording. “People are hording their dollars in anticipation of further depreciation of the naira, while some are demanding higher exchange rate before they sell,” said the Abuja-based BDC operator.
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