Central Bank of Nigeria (CBN) has commenced investigations into the persistent depreciation of the naira in the parallel market.
The naira has depreciated by N42 in the parallel market since Tuesday June 28, when the apex bank, banned 41 items from the foreign exchange market. From N220 per dollar as at June 28, the parallel market exchange rate rose to N242 as at Thursday.
Miffed by the pace of this depreciation, the CBN dispatched three of its directors to Lagos on Tuesday to conduct market surveillance.
Specifically they were given the mandate to discuss with bureaux de change (BDC) operators to ascertain what is causing depreciation of the naira in the parallel market, and measures that can be deployed to address the depreciation.
Confirming this development, Managing Director, Sabil BDC, Alhaji Aminu Gwadabe, said that the CBN team wanted to know why the naira is depreciating even on Wednesday when the CBN sells to BDCs.
“We told them that the reason is that the forex users know that CBN sells to BDC on Wednesdays; hence they always position their demand against what the BDC will get from CBN. But because what the CBN sells to us is not enough to meet the demand, the exchange rate rises further.
“We also told them that, the solution is to increase the amount of forex they sell to BDCs. That is how we can narrow the N46 gap between the official rate and the parallel market exchange rate.”
This was also corroborated by Managing Director, H.J Trust BDC, Mr. Harrison Owoh. He said, “The depreciation of the naira in the parallel market is driven by genuine demand from importers banned from the foreign exchange market. You know we cannot sell to them. They can only buy from the black market. Hence the black market is dictating the rate.
More so, BDCs have only two sources of dollars, what we buy from CBN and from walk-in-customers. So we don’t have supply, we also are limited in who we can sell to. So the market is determined by the black market. The solution is for the CBN to increase dollar sales to BDCs, otherwise the rate might continue to go up