Black market is shallow, can’t dictate naira rate –Emefiele

Nigeria’s official exchange rate cannot be controlled by the parallel market, where the local currency has depreciated to its lowest level in three months, Godwin Emefiele, the Central Bank of Nigeria (CBN) said on Tuesday.

“We do not agree that the determining factor for our currency should be based on a market that is tainted, where people go to offer bribes,” the regulator’s chief said in Abuja while announcing the decisions of the bank’s monetary policy panel.

On Tuesday, naira exchanged at 483 to the United States dollar on the unofficial parallel market, data from abokiFX, a website that analyses rates from street currency traders in Lagos, showed.

Meanwhile, at the spot market known as the Investors and Exporters (I&E) forex window, mostly used by manufacturers, naira changed hands at 385.50.

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Liquidity has been at low ebb at the reasonably cheaper I&E window, implying that those in need of the greenback resort to the black market, causing dollar to be more expensive.

The International Monetary Fund has recommended that the CBN give more room to flexibility at the I&E window in a bid to cut forex demand in the parallel market.

“The black market is illegal where people do not provide documentation to support transactions. It is unfortunate and unfair for analysts to say Nigeria’s exchange rate is at 480 per dollar,” Mr Emefiele said.

“The parallel market is a shallow market of only about 5 per cent of the foreign exchange market which is patronized by people who go there for cash to offer bribes and corruption.

“Parallel market is the place where people who don’t want to provide documents go,” he added.

Naira has weakened massively this year by as much as 24%, relative to the currencies of nations like India, South Africa, Russia and Indonesia, the apex bank boss added.

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