26 June 2015, Lagos – The naira tumbled against the dollar from 222 on Wednesday to 225 on Thursday, barely 36 hours after the Central Bank of Nigeria banned importers of rice, textiles, tomato paste and 38 other items from getting their forex needs from the nation’s forex market.
The regulator had said the new rule would help preserve the external reserves, facilitate the resuscitation of domestic industries and generate employment opportunities.
But the ban, which economists said would see about $5.7bn quarterly forex demand by importers of the items move from the official to the parallel market, is already fuelling scarcity of dollar at the black market and the Bureau De Change segment of the forex market.
Black market operators in Lagos, Abuja and Kano told our correspondent on Thursday that they had limited amount of foreign currencies for sale.
While many claimed that they did not have dollar for sale, a few who were ready to sell the currency quoted between N224 and N225 as the selling price.
The Acting President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, said the dollar sold for between 224 and 225 on the street market because many of the operators were hoarding their stock of forex in anticipation of further rise in prices against the naira.
The hoarding, he said, followed the CBN’s new policy banning importers of 40 items from the forex market.
He said, “Most operators at the black market and a few at the BDC segment are hoarding their stock of forex in anticipation of further price increase. Most of them believe the CBN’s new policy will shift a lot of demand to the parallel market and the BDC segment, a situation that may make the naira to fall. So, rather than sell what they have, they are hoarding it. It is this artificial scarcity that is causing the price to rise.
“As of today (Thursday), the United States dollar is being sold for between N224 and N225. However, pounds and euro are still at 350 and 249, respectively. They may also rise in the coming days, while the dollar may sell for N230 by next week.”
The CBN had said that traders desirous of importing the banned items could do so using their own funds without recourse to the forex market.
Economists and analysts said the move would put the naira under further pressure as importers push more demand from the interbank forex market to the parallel market.
Trading on the interbank market, which is pegged around the central bank’s rate of N196.90 to the dollar, was at N199.40 on Thursday.
An economic and financial analyst at the WSTC Financial Services Limited, Mr. Olutola Oni, said the new forex rule would lead to inflation.
The Head, Research and Investment, Afrinvest West Africa, Mr. Ayodeji Ebo, said that the new policy would reduce the income of banks.