Currency depreciates to N700
The Senate, yesterday, summoned the Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, to brief senators on the reasons for the rapid depreciation of the value of naira. The Chamber also mandated the Senate Committee on Banking, Insurance and Other Financial Institutions to assess the impact of CBN intervention funds meant to support critical sectors of the economy. The lawmakers passed the resolutions following its consideration of a motion entitled: “State of CBN Intervention Funds and Free Fall Of Naira.” and sponsored by Senator Olubunmi Adetunmbi (APC – Ekiti North).
Coming under Order 41 and 51 of the Senate Standing Order, as amended, Adetunmbi bemoaned Nigeria’s economic reality amid an urgent call for “extraordinary measures.” He noted that CBN, through its numerous multi-sectoral intervention funds, provided special funds to support critical sectors of the economy. He explained that in view of such interventions, it had become necessary to assess the state of implementation and effectiveness of the funds deployed for the purpose. The lawmaker recalled that CBN, in 2021, placed an indefinite halt on forex bidding by Bureau de Change operators (BDCS) and importers over allegations of abuse and mismanagement, sayin that the halt by CBN resulted in a spike of the exchange rate. According to Adetunmbi, “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 travelers and businesses.” He expressed worry that the import and export window meant to serve the forex needs of business giants, “has become a rare opportunity that only a privileged few can access.
“These and a number of others have contributed to the excessive scarcity of forex in Nigeria today,” he added. He noted that as at July 26, 2022, the exchange rate in the autonomous segment (BDCs) of the foreign exchange market was N670 to $1 and projected to end at N1000 by end of the year based on the current rate of depreciation. He, therefore, advised the Central Bank of Nigeria to take new measures to curb forex scarcity and address the sliding rate of naira exchange. In his contribution, Senator Sani Musa (APC – Niger East), faulted the CBN’s decision to halt foreign exchange biddings, thereby cutting off the parallel market – Bureau de change operators. According to him, the attempt by the CBN to control the value of the naira with the continuous exclusion of BDCs would only lead to its further depreciation. He, therefore, advised the apex bank to rather ensure the regulation and monitoring of the parallel market. “What CBN used to do was to give out $10,000 (USD) to each of these BDCs with a clear directive for it not to be sold above N470 as against the $419 exchange rate. It worked.
“But today, nobody is determining where the rate is going and I can assure you we can’t have that solution because we are only importing,” he said. On his part, senator representing Katsina North District, Ahmad Babba-Kaita, said one way to improve the value of the naira was to encourage foreign investments to attract inflow of other currencies into Nigeria. Meanwhile, naira continued its free fall at the parallel market yesterday, dropping to N700 per dollar compared with the N658/$1, it traded on Tuesday, traders said.
The traders, who attributed the local currency’s decline at the parallel market to increased demand for the dollar, expressed concern that speculators were intensifying their activities in the market. Also, naira weakened at official Investors and Exporters’ (I&E) window on Tuesday, closing at N416.14/$1 compared to N415.72/$1 recorded as of the close of trading activities in the previous trading session, according to data posted on the Central Bank of Nigeria (CBN)’s website. However, while naira’s exchange rate remains relatively stable at the official market, banks continue to struggle to meet demand for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA). New Telegraph reported yesterday that a former Commissioner for Finance in Imo State and currently Professor of Capital Market at the Nasarawa State University Keffi, Uche Uwaleke, ascribed the volatility witnessed at the parallel market segment of the foreign exchange market, in the last few days, to the activities of politicians who are gearing up for next year’s general election.