Dollar Hits N1,900 Despite FG’s Clampdown; Pound Hits N2,250
The naira Tuesday slid further at the parallel market in spite of the clampdown the federal government ordered on foreign exchange market speculators. Bureau De Change (BDC) hubs were raided in Abuja, Lagos and Kano and some operators were arrested.
In spite of the federal government's crackdown on foreign exchange market speculators, the naira continued to decline on Tuesday on the parallel market.
A number of operators were taken into custody during raids on Bureau De Change (BDC) hubs in Kano, Lagos, and Abuja.
The naira fell even further in spite of the raids, with a dollar worth 1,900 in Abuja, Kano, and Lagos, and N1,800 in Lagos; the British Pound was worth N2,250.
The Nigerian Autonomous Foreign Exchange Market (NAFEM) reports that the naira closed at N1,551.24 on the official market, slightly higher than it did at N1,574.62 earlier.
According to reports, earlier yesterday, National Security Adviser Nuhu Ribadu gave orders to members of the Nigeria Police Force, the Nigeria Customs Service (NCS), the Economic and Financial Crimes Commission (EFCC), and the Nigeria Financial Intelligence Unit (NFIU) to crack down on forex market speculators.
He asserted that this was a deliberate attempt to protect Nigeria's foreign exchange market and thwart the actions of local and foreign speculators using a variety of avenues.
Ribadu's statement stated, “The CBN's proactive measures to stabilize the foreign exchange market and stimulate economic activities have been commendable.
“However, the effectiveness of these initiatives is being undermined by the activities of speculators, both domestic and international, operating through various channels, thereby exacerbating the depreciation of the Nigerian Naira and contributing to inflation and economic instability.
“To reduce the pressure on the naira, the EFCC raised a 7,000-man special task force across its 14 zonal commands to clamp down on dollar racketeers.
“Yet, recent intelligence reports have highlighted continued illicit activities within the Nigerian foreign exchange market. The ONSA and CBN are therefore embarking on this collaborative approach to tackle these infractions.
“This partnership will involve a coordinated effort with key law enforcement agencies, including the Nigeria Police Force, the EFCC, the Nigeria Customs Service and the Nigeria Financial Intelligence Unit (NFIU).”
According to the NSA, the government sought to prevent what he called “malicious practices” by utilizing the combined knowledge of those four security agencies. This was done to safeguard the interests of investors and encourage steady economic growth.
Security personnel raided unlicensed BDC operators yesterday on the streets of Lagos, Abuja, and Kano, following an order from the National Security Agency.
Five BDC operators are said to have been arrested at the well-known Allen Avenue in Lagos when EFCC agents raided the area at around ten in the morning.
When they spotted the security personnel, many of the unlicensed operators conducting business by the road ran away.
A person working said: “They came to our place today; they said we are the ones responsible for the hike in foreign exchange. All of us had to take to our heels for fear of arrest.”
Another said five of his colleagues were arrested during the raid, adding, “Many of us have run away now and we are monitoring the situation.”
In Kano, a dollar is worth N1,870
Tuesday, at the well-known Wapa Bureau de Change market, one dollar was worth N1,870.
The price of the dollar continued to rise, according to an operator named Ammar Aminu, even though no EFCC agents visited the market to crack down on forex speculators.
He declared, “Today, the dollar has risen to N1,870 from N1,750 it was sold on Monday.”
Attack in Abuja
The popular Zone 4 business area was raided by EFCC operatives, according to Bureau De Change operators in Abuja.
A few of the operators stated that on Monday, the operatives arrived in large numbers.
Gidado Muktar, a BDC operator, stated, “We were just on our own when we saw operatives of the EFCC in their numbers in over three Hilux vans storm our vicinity at Zone 4 and the next thing we saw was that they started arresting some of our members. They put them in their vans and drove off.
“What I was told later was that they were acting on a tipoff that some people were hoarding dollars and that was why they came and effected arrests.”
Mustapha Ibrahim, another operator, stated: “The way and manner the EFCC came was shocking; as if the BDCs were the ones responsible for the paira's fall.”
“There are some kinds of forex demands that you cannot go to banks to do. You have to resort to all these BDCs. The way they (the government) are going about it now is like pushing them into a darker place.
“The implication of that is that it would now become more expensive. I don't see it solving any problem. Rather, it would compound the problem.
“What will create hoarding is if there is scarcity. If you can't remove scarcity, there will be hoarding. If we really want to solve the problem, just remove the scarcity.
“Everything they (government) are doing now is a short-time measure. What they are doing now is trial and error and the way they are going about it is wrong.”
Raid is not the best course of action — A financial expert
In a recent interview, economist Dr. Oluseye Ajuwon stated that punishing BDC operators would not address the foreign exchange crisis.
Ajuwon, a lecturer at the University of Lagos' Department of Economics, claimed that the raid was like adding salt to the wound.
FX market stabilization strategies
Agora Policy, a think tank based in Abuja, stated that the government needed to adopt a new strategy to stabilize the market in a report titled “Steadying Nigeria's Fledgling Foreign Exchange Reform” through the lens of its financial analyst, Wale Thompson.
Simple FX adjustments made in response to reality, the analyst said, “may lead to short-lived gains, followed by a return to previous practices.”
He said, “To avoid this cycle, forex and monetary policies should be part of a comprehensive economic plan where the exchange rate serves as a tool for export diversification and for attracting capital flows to foster overall development. Successful fixed-to-floating transitions are characterized by certain key features.
“The long-stated objective of Nigeria's policymakers is to diversify its export base which, given Nigeria's labour abundance, distils to ensuring that industrial activity geared towards the production of exportable goods that use a lot of low- skilled labour that is abundant in Nigeria.
“To ensure export competitiveness of these non-oil exports, exchange rate policies must look to deliver an extra layer of competitiveness to export prices in a form that favours domestic industries,” the analyst added.
NACCIMA desires a N850 dollar peg
In separate letters to the CBN Governor, Olayemi Cardoso, and the Minister of Industry, Trade, and Investment, Doris Nkiruka Uzoka-Anite, yesterday, Dele Kelvin Oye, President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), urged that the dollar be pegged at between N750 and N850 starting on March 21.
'NACCIMA's Suggestions for Addressing the Continuous Depreciation of our Currency,' the letter to Cardoso titled, called for official transactions, monitoring and compliance, transparent communication, oversight of remittances, and enforcement of currency regulations.
He requested that the CBN implement more stringent guidelines for currency transactions, such as heavy fines, legal action for breaking the law, and the seizure of funds related to transactions that go against a set range of exchange rates, like the maximum 15% deviation from the official rate.
“The government should consistently communicate its policy intentions and economic measures to the public to strengthen confidence in the nation's economic management.
“All government agencies, at every level, should be mandated to conduct their transactions at the official rate, and severe penalties should be imposed for violations,” he said.
View us as associates, BDC operators
Speaking about the raid yesterday, the Association of Bureau De Change Operators of Nigeria (ABCON) criticized the actions of unlicensed operators who had no documentation of the clients they were serving.
In an interview with reporters, ABCON president Aminu Gwadabe urged the government to work with his members to address currency volatility.
He declared that his members had the necessary licenses to conduct forex business out of their offices.
“The activities of those unlicensed are what the EFCC and security agencies are not happy about. So, you can't see a BDC outside and call him a BDC operator without an office. One of the requirements to operate as a BDC is that you must have an office.
“On our part, we are coming up with solutions that would automate the entire retail exchange where we make it simpler for even the ones that want to operate under the Bureau de Change so that their activities can be monitored because most of them are operating where the security agencies and the CBN don't have reports of their transactions.
“So, we are putting a solution which we believe would be to the credit of the government, that can come and automate, digitize, liberalise, democratize the entire retail sector in the country,” he said.
He asserts that the lack of resources to operate has led to the extinction of nearly all licensed operators.
He stated that the government can alleviate the current forex hike and increase market liquidity by collaborating with the BDC.
In spite of the federal government's crackdown on foreign exchange market speculators, the naira continued to decline on Tuesday on the parallel market.
A number of operators were taken into custody during raids on Bureau De Change (BDC) hubs in Kano, Lagos, and Abuja.
The naira fell even further in spite of the raids, with a dollar worth 1,900 in Abuja, Kano, and Lagos, and N1,800 in Lagos; the British Pound was worth N2,250.
The Nigerian Autonomous Foreign Exchange Market (NAFEM) reports that the naira closed at N1,551.24 on the official market, slightly higher than it did at N1,574.62 earlier.
The Nigeria Police Force, the Economic and Financial Crimes Commission (EFCC), the Nigeria Customs Service (NCS), and the Nigeria Financial Intelligence Unit (NFIU) agents were reportedly ordered to crack down on foreign exchange market speculators earlier yesterday by National Security Adviser Nuhu Ribadu.
He maintained that this was a deliberate attempt to protect Nigeria's foreign exchange market and thwart the actions of local and foreign speculators using a variety of avenues.
No comments:
Leave comment here