Dollar crashes against Naira – Soludo meets bank chiefs today

Nigerian Tribune: AGAINST the backdrop of Central Bank of Nigeria’s plans to step up supply of dollars to Bureau de Change (BDC) operators buy as much as $200 million a week, dollar exchange for naira has crashed to as low as N156 in the parallel market. At the official market on Friday, the dollar traded for N147.20, the pound sterling and euros went for N200.65 and N213.10 respectively.

BDC operators, who spoke with the Nigerian Tribune in Lagos, said the crash was informed by the decision of currency traders and speculators to flood the market in anticipation of the CBN’s injection of massive funds.

It was gathered that those that have been hoarding the dollar in anticipation of a prolonged forex crisis have decided to release it to various outlets of sales to prevent loss.

According to a BDC operator in Ikeja, the foreign exchange (FOREX) market witnessed a large inflow from countries such as the United Arab Emirates and Malaysia, adding that the speculators were afraid of huge loss if the CBN went ahead to increase dollar supply to BDC operators.

“The crash in the forex market is as a result of CBN’s plans to flood the market with dollars. The speculators are afraid that once the CBN makes good its threat, the dollar they are holding would crash, hence they decided to offer them for sale,” he said.

He, however, warned that the present development was temporary as the dollar against naira would rise astronomically if the CBN failed to deliver on its promise.

The CBN governor, at a media briefing in Abuja last Tuesday, had said the apex bank was ready to supply between $100 million and $200 million between last week and this week as far the market could absorb, to rescue the crashing naira, adding that it was an effort to support the weak naira and narrow the disparity between its official rate and the parallel market.

Last month, the CBN raised the minimum capital requirement for BDCs to access foreign exchange auctions to N500 million, up from N10 million, in a bid to stop funds flowing to the black market.

Meanwhile, the CBN sold $102 million at its foreign exchange auction on Thursday at N147.20 to the dollar, well below the demand of $285 million.

On Wednesday, the CBN sold $122 million at N146.95 to the dollar at its auction, up from a rate of N146.60 at its previous auction last Monday.

Traders said the naira strengthened to N162 from N178 to the dollar on the black market on Friday, as larger dollar inflows to the BDC market trickled through.

Meanwhile, CBN Governor, Professor Chukwuma Soludo, is scheduled to meet with chief executives of banks today. Top on the agenda is the issue of de-marketing that is ravaging the industry. The apex bank is expected to announce far-reaching sanctions to check the growing trend.

The CBN had threatened to impose strict sanctions, such as blacklisting offending banks and their staff that engage in the act.

According to Soludo, “I understand that some people sent text messages. They want to stampede the system into crisis where none exists and where none is likely.”