Currency dealers have warned that the Naira exchange rate to the Dollar could rise to as much as N600 to a Dollar following the Central Bank of Nigeria (CBN) decision to halt the sale of dollars to Bureau de Change (BDC) operators.
According to the traders, they expect the market to respond and devalue as it did in 2016 and 2017 when a similar decision was announced by the apex bank.
When CBN restrained the BDCs from selling dollars five years ago, the Naira/$ exchange rate increased from about N300 in the black market to N400 for the first time.
This time the operators are suggesting the exchange rate in the parallel market will hit N600/1$ over increasing pressure on demand in the coming days.
“I can assure you of changes in the coming months. I don’t see how the CBN will meet the size of demand outside the official market,” one of the traders said on condition of anonymity.
The CBN sells about $110 million to BDCs every week to meet the demand for personal and business travel.
However, it seems the apex bank has this sorted out as the CBN Governor, Godwin Emefiele, noted during the Monetary Policy Committee (MPC) meeting that going forward, banks would reorganise their operators to cater to customers who patronise BDCs.
He also urged banks to meet genuine demand as soon as possible.
“There is nothing that BDCs do that banks cannot do better. 6,000 BDCs add little or no value to the market today,” Emefiele added.
Data from Abokifx showed Tuesday evening that the Naira has already reacted to the CBN’s ban on forex sales.
Naira value dropped by N1 to 505/$1 at the parallel market compared to the N504/$1 recorded in the last three sessions.