Naira fluctuates in Abuja after CBN decision on Forex By Nduka Chiejina (Assistant Editor)

Twenty four hours after the Central Bank of Nigeria (CBN) came down hard on Bureaux De Chnage for allegedly facilitating money laundering and other forex infractions, the Naira has been fluctuating against the dollar in the market in Abuja. Bureaux De Change operators told The Nation the Naira fell to dollar steadily after the announcement by the CBN. An operator Nura told The Nation that they “buy dollar around N507 and N510 while they sell around N512 and N513.” However he noted that it appears the reaction “is not strong as the value of the Naira has started to appreciate by evening time”. Professor Uche Uwaleke of the Nasarawa State university said: “The decision by the CBN to stop forex sales to BDCs has merits and demerits but I think it is in the best interest of the Nigerian economy. “On the positive side, it is consistent with the move by the CBN to unify exchange rates and bring more transparency to the forex market. “Exchange rate unification is in line with the IMF and World Bank’s recommendations and so improves the country’s profile and credit standing before International financial institutions. It signifies that the country is serious in her reform efforts” he said. The CBN decision, he said, “will slow down the rate of depletion in external reserves and will likely check round tripping of forex and reduce supply of forex in the parallel market”. Stopping the sale of Forex to BDCs, he added, “will reduce speculative demand for forex. I am aware that BDCs have been accused of being vehicles for bribery and corruption. This will likely reduce”. A more transparent forex market he stated “will improve confidence in the economy and could lead to increased foreign investments”. On the flip side, this measure he warned could “wipe out the employment opportunities created in the sector with over 5,000 BDCs and several others waiting to be licensed. There is no doubt that many of them will fold up. “Also, the gap between the AFEX rates and parallel market rates is likely to widen further with dollar shortages in BDC and parallel market segments”. Going forward, he urged the CBN to “ensure that purchase of forex via the banks which will now increase is made stress free with minimal documentation. “This is what pushes people to the parallel market. Overall, it is a bold and salutary decision that deserves commendation”.