Until government finds a lasting solution to abuse in the foreign exchange market, the more than 35 per cent widening gap between the interbank market (official rate) and the parallel market (unofficial rate) will continue to grow.
This was the conclusion of finance and investments experts on Tuesday in reaction to CBN Governor, Godwin Emefiele’s assessment of the exchange rate of the local currency, the naira, from the unofficial rate transactions.
At the reading of the MPC communiqué, Tuesday, the governor said:”if you arrived at Heathrow Airport and bought pounds sterling from a local dealer within the airport, can the price be used as the official rate of exchange to United Kingdom’s pounds; if no why so in Nigeria?”
But experts faulting him on this maintained that there is no country that allows abuse in its foreign currency market that has ever enjoyed stability in the system.
Paul Sogolo, a business analyst with RMB Investments, a consultancy firm said, “scarcity creates short cuts in every human transactions and that has been the case with what Nigeria is passing through with the economic meltdown, with dollar nowhere to be found. With the only known source being the CBN which is not having any rein on the institutions creating abuse over the management of the scarce resources, the naira will continue to fall in value.”
According to him, “evidence of some bank officials diverting foreign currency, allotted to them to their cronies, abound yet the apex bank would want you to come with evidence there are bank inspectors and investigation department in the bank.”
The chairman of an Ikeja-based manufacturing firm said his company had found it easier sourcing foreign currency from the unofficial market because of less bureaucracy.
In the past months, Nigeria has been going through its worst economic recession, which has seen a dollar exchanging for as high as N415 at the parallel market and N315 in the official market.
In August, the CBN in a bid to shore up naira value reversed itself by allowing bureau de change operators to buy foreign currency directly from it, but not exceeding $5,000 per transaction.
Also, other indexes of economic recovery are still not present, despite the optimism by Emefiele, last weekend that the worst of the economic recession was over
For instance, most of the over-the-counter (OTC) market transactions for debts and foreign exchange (forex) management, have maintained a sharp drop since the beginning of third quarter, leading to investors being less interested in patronising security instruments across the various categories.
In the latest summary of such activities at the OTC market, according to the Fiscal MonitoringDepartment of the apex bank, turnover of transactions in the fixed income and currency markets in August dropped by 23.5 per cent or N2.99 trillion to N9.75 trillion compared with the performance in July.
There is also a decline of 15.9 per cent or N1.84 billion compared with the comparable period of 2015 in Treasury Bills transactions.
By Emma Eke….
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