The naira continued to regain strength and appreciate in value in the parallel market on Tuesday as it was sold for N425 to a dollar. However, it was N450 to a dollar at the close of transactions on Monday.
A survey carried out by the News Agency of Nigeria (NAN) on Tuesday at the Bureau De Change (BDC) market in Abuja revealed that BDC operators bought at the rate of N415 and sold at N425. The BDC operators bought the Pound Sterling at N500 and sold at N510, while the Euro was bought for N420 and sold for N425.
For the inter-bank rate, the dollar exchanged for N331.6, Euro 335.75, while the pound exchanged for N394.25. Some of the BDC operators told NAN that the provision of forex by the CBN to the commercial banks was responsible for the appreciation of the naira in the market. Mr Sani Ahmed, one of the operators said that the best way to crash the high rate in the market was the continuous injection of liquidity into the market.
According to him, the appreciation of the naira is a good development for the BDC operators and other investors who require forex for their businesses. “Now that the naira is appreciating, we make more profit because if you buy at the lower rate, you sell and make gain. “When the cost of dollar is high, we make little profit; but when it is low, we make more profit because we buy more to sell.”
He, however, said that there was the challenge of accessing the forex from the commercial banks because of the stringent measures stipulated by the deposit money banks to obtain the forex. “If someone applies for forex from the banks, it takes time and the process is frustrating; sometimes, they make additional demands before they issue forex to you,” Ahmed said. Experts have, however, expressed concern about the sustainability of the measures by the apex bank.
An economic expert, Prof. Uche Uwaleke, admitted that a complete currency float was capable of unifying rates and reducing round tripping and speculative activities in the market. He, however, said that such a measure could be suicidal for an import-dependent economy that derived much of its forex inflow from a single commodity.
He, therefore, recommended coordinated fiscal policies designed to encourage import substitution and enhance competitiveness of local production to help reverse the downward trend in the value of naira. “Government should fast track efforts to improve the ease of doing business and the state of infrastructure in order to attract foreign investments to develop multiple streams of earning foreign exchange. “It is only when the supply of forex is guaranteed from diversified sources that the issue of market-determined value of the naira can be tabled for consideration,” Uwalake said.