Naira Weakens on Parallel Market Despite CBN $16m Sale to BDCs

The naira weakened further against the United States dollar on the parallel market on Wednesday in spite of the sale of the greenback to bureau de change (BDC) operators by the Central Bank of Nigeria (CBN).

Specifically, the nation's currency was sold at about N272 to a dollar at some parallel market points in Lagos on Wednesday, weaker than the N267 to a dollar it traded on Monday.

The acting Chairman, Association of Bureaux De Change Operators of Nigeria (ABCN), Alhaji Aminu Gwadade, confirmed to THISDAY that the central bank sold $10,000 each to 1,600 BDC firms at an auction on Wednesday.

That was the first dollar cash sale to BDCs this year.

"The CBN sold $10,000 each to 1,600 BDCs, but it was not enough to meet the huge demand in the market," Gwadade said in a telephone chat with THISDAY.

President Muhammadu Buhari last week reiterated his opposition to the devaluation of the nation’s currency, saying he was yet to be convinced on its merits. Speaking on his first media chat in Abuja since assumption of office, he stressed the need to provide foreign exchange to productive sectors so as to reflate the economy, insisting that the challenge faced by the Nigerian economy was aggravated by the drop in crude oil prices.

When asked if it wasn’t time for the central bank to devalue the naira in view of the pressure in the foreign exchange market in recent times, he said: “I need to be convinced on the naira devaluation. If you devalue the naira, against what? Against the US dollar, against pound sterling, against the yen, against the deutschmark, against the French franc?

“If you seriously look at our state of development and that of other countries, as well as the IMF and World Bank that play around with currency devaluation, you will know that devaluation is for developed countries that can compete with their goods and services.

“This is because devaluation will make it cheap for their currencies and for them to sell more of their goods and services and they keep their people employed and their factories open. But Nigeria imports even toothpicks.
“Don’t forget, we have 41 items that had been banned from getting foreign exchange for importation, from rice to toothpick! Look at the lifestyle of Nigerians.

“If we are exporting textiles, vehicle parts, and others, things would change and other countries would be able to buy our spare parts, our textiles and our goods and services, and when we devalue under such conditions, we can sell more, employ more people and produce more. But we are on the receiving end.”

When prodded further on the hardship businesses were experiencing accessing foreign exchange, Buhari pointed out that there was a need to locate productive firms and industries, find out what the essential raw materials they need, spare parts as well as the machinery they need for production.