Tuesday, December 5, 2023
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Senate summons CBN governor as naira lost 34 per cent of it’s value

Exactly a year after the Central Bank of Nigeria (CBN) stopped the weekly funding of the bureaux de change (BDC) operators, crisis in the foreign exchange (FX) has worsened, with the dollar nearing the N700/$ ceiling, yesterday.

The level of panic witnessed in the past two weeks may have triggered fresh speculative behaviours that seem to be pulling the market into a self-fulfilling cycle. 
Some online media reported, yesterday afternoon, that the naira had fallen to N710/$, with the stories going viral, but findings suggest that the reports were largely speculative, as no dealer confirmed that the local currency had slipped that low. 
Report says that dollars used by politicians during recent party primaries had been warehoused by the party leaders, delegates and other beneficiaries of the proceeds, hoarding them for bargain hunting.
The latest investigation confirmed that much of the proceeds, part of which came from the parallel market, have yet been supplied to the market. Also, there is undue pressure on the dollar search due to the payment of school fees abroad and summer travel plans.
As of yesterday morning, the greenback was exchanging for N670/$. But some dealers in Abuja and Lagos were buying at between N680 and N703 to a dollar before the viral online report surfaced.
With its current black market trading position, the naira has lost about 34 per cent of its value to the dollar at the window, which many consider the closest to the real rate of the naira. 

It is the first time the troubled naira would plunge that low. Some of the dealers warned that the domestic currency could be heading to N1,000/$, having broken the N700 resistant point.

The Senate, yesterday, resolved to invite the CBN Governor, Godwin Emefiele, over the free fall of the naira in recent weeks. Emefiele was asked to appear before the Senate in plenary and address the lawmakers behind closed doors.

The lawmakers, however, did not fix a date for the governor to appear. On Wednesday, the lawmakers also resolved to embark on a two-month recess that will end on September 20.

The resolution to invite the CBN chief was sequel to the deliberation on a motion by the Ekiti senator, Olubunmi Adetumbi.

The Naira fell significantly against the U.S. dollar at the official market on Tuesday. It opened at N427.30 and closed at N431.00 to a dollar. At the parallel market, the exchange rate was up to N670 a dollar and as of Wednesday morning, it was pegged at N710 to a dollar, although it fell briefly to about N670 to a dollar by evening.

In his presentation, Adetumbi recalled how the CBN earlier placed an indefinite halt on forex sales to BDC operators due to fraudulent acts, a move, he said, triggered the spike of the exchange rate. He expressed concern that the import-export window meant to serve the forex needs of business giants has become a rare opportunity that only a privileged few can access.

“The two instruments of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) could only serve less than 20 per cent of the total forex demand by travellers and businesses,” he said.

He called on the CBN to take a new measure to curb the current scarcity and address the sliding exchange. Contributing to the motion, another Ekiti senator, Biodun Olujimi, said there was need to penalise somebody for failure and the free fall of the naira “and that is the CBN.” She wondered why BDCs were shut down and prevented from selling.

Olujimi also lamented how airlines are shutting down and the price of Jet-A1 fuel skyrocketing. “What is happening to the dollar is a replica of what is happening to Nigeria. We are bleeding and bleeding badly.”

The Senate, thereafter, urged the CBN to urgently intervene to stop the rapid decline in the value of the naira in relation to the dollar and other international currencies.




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