In an apparent response to the sustained spike in the foreign exchange rate in the country, the Association of Bureaux de Change Operators of Nigeria (ABCON) has begun the mobilisation of its members to narrow the spread between spot and illegal market value of dollars

Consequently, the association has asked its members not to hoard foreign currency, Aminu Gwadabe, president of the association, said in a text message to Bloomberg. He explained that a group of officials had been checking on compliance in cities across the country.

Money market dealers disclosed that dealers hoarding dollars may be barred from the central bank’s foreign-exchange auctions.

The Naira, which plunged to a four-year low of N505 a dollar on Monday, gained 0.6% to N490 yesterday in the unauthorised market, according to abokifx.com, a website that collates the data. It opened at N411.58 a dollar on the nafex window also used as the official rate by the central bank.

With inflation at almost 18%, many people have been accumulating foreign currencies to protect their wealth, often buying dollars from illegal traders. The demand in the parallel market distorts the exchange rate, according to the Central Bank of Nigeria, and has prompted it to take steps to narrow the spread.

We advise, and warn our members in particular, and the public to desist from any behaviour of speculation and hoarding,

Gwadabe said. Such actions

will definitely lead to a very big collateral loss,

he said

A central bank spokesman said the lender was taking steps to block arbitrage opportunities resulting from the gap between the official and parallel markets.

Commercial banks executives also agreed to increase dollar supply for end users in a meeting that held with Governor Godwin Emefiele last week. With the arrangement, lenders can provide the greenback at the official rate of about N410 to N412 to reduce demand pressure on the streets.

Nigeria devalued its currency thrice since March last year as lower oil income, which accounts for about 90% of dollar earnings, put pressure on external reserves.
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Justin Nwosu

Justin Nwosu is the founder and publisher of Flavision. His core interest is in writing unbiased news about Nigeria in particular and Africa in general. He’s a strong adherent of investigative journalism, with a bent on exposing corruption, abuse of power and societal ills.