Demand Pressure Pushes Naira To N788 Per Dollar

…Banks Will Track BDCs Deposits– CBN

The Naira has crashed to N788 to a dollar at the parallel market as people hoarding the local currency are looking for ways to exchange it before the affected denominations cease to be legal tender.

The market is reacting to the announcement by the CBN on withdrawal of N1,000, N500 and N200 notes by the end of January 2023.

New notes will be issued on December 15, but over N2.67trn out of the N3.2trn in circulation is being hoarded, according to the CBN Governor, Godwin Emefiele.

Stakeholders believe that the period is too short for exchanges.

But CBN said it is partly targeting stolen funds hoarded by politicians and top government officials.

Before the announcement, the naira had traded N757 per dollar, it has hit N788, THE WHISTLER can confirm.

“If you have naira, we sell at N788 and we buy at N780. The market is now booming as people are looking for ways to sell of their naira notes for the dollar. Those who have billions are trying to beat deadline,” Usman, a Bureau de Change operator at Zone 4, Abuja said.

At the Investors’ and Exporter Window, the currency fell to N444.75 from N441 traded on Wednesday.

Ahmed Bello Umar who is the Director Currency Operation of the CBN said on Friday that the price is driven by panic buying.

Umar also said that the transactions and deposits of BDCs in banks will be tracked.

Umar said, “Basically, you say that people are just panicking trying to exchange the excess naira they have for the dollar. But then, we have to remember that the BDC segment of the market is just less than five per cent of the entire FX market and what we are looking at is a situation whereby by their mandate, the BDCs are supposed to do low ticket transactions in terms of school fees, hospital payment and allowance.

“I imagine that as we progress receiving deposits from banks, of naira, the BDCs themselves will be in the quagmire where they will not be able to explain their source of getting so much money.”

He said for instance, if they are doing a ticket of $5,000 in a day and they deposit N20m today, N20m the next day obviously that is above the exchange rate value of the $5,000 in the parallel market.

“They are aware, the national executive committee of the Association of Bureau de Change Operators under ABCON led by Aminu Gwadabe have sent out a massage to their members warning them to be careful.

“There are issues around know your customer and then due diligence on the BDCs you are dealing with.”