Expert Urges CBN To Clear Foreign Exchange Backlogs As Naira Exchanges At N620/$1

The scarcity of foreign exchange is causing a huge demand at the unofficial market where it is currently trading at N620 per dollar.

The naira has lost value at the parallel market by 31.91 per cent from N470 in January, 2022 to N620 per dollar in June.

The disparity between the official rate which trades at N415.83 per dollar and the unofficial rate is around N204.17 leading to increased pressure on the unofficial window.

The CBN in 2021 channeled its intervention to banks for them to handle official foreign exchange transactions after banning bureau de change operators from its weekly intervention.

But round-tripping has marred the process, according to the apex bank.

“It (roundtripping) is an industry that has been thriving. Unfortunately, the system has created this monster and we need to address it. I don’t see a situation, unless the CBN decides to take a radical action to converge the official and the parallel market, you will still see people rent seeking,” Tosin Osunkoya, the Chief Executive Officer, Comercio Partners Assets Management told Channels Tv on Friday.

Foreign airline operators in Nigeria are frustrated over blocked foreign exchange remittances by the CBN amounting to $450m, according to the International Air Transport Association (IATA) Regional Vice-President, Africa and Middle East, Kamil Alawadhi.

Nigerian banks have also reduced spending on naira debit cards to $20 per month from $100 citing ‘current foreign exchange situations.’

Osunkoye said the CBN and other monetary authorities need to collaborate to save the naira and restore investor confidence in the Nigerian economy.

“Banks have a role to play, the fiscal authorities have a role to play. The first thing the central bank has to do is to restore confidence in the naira. You have backlogs not only in aviation; you have backlogs of foreign portfolio investors waiting to repatriate their funds. The central bank has to bring all of those backlogs down to a significant level.

“They also need to look at how to straighten the supply channel. They must implement value addition in export facilities. When you talk about the security challenges that we have, all these challenges must be addressed by the fiscal authorities. So, you don’t leave everything only to the monetary authorities.

“When I say ‘all the stakeholders’, it is important that everybody comes to the table and address the problem at hand.”