Dollar exchanged at N603 (average) at Lagos and Abuja parallel markets. Indicating a worsening liquidity crisis in the foreign exchange market of Africa’s biggest oil producer.
At the Importers and Exporters (I&E) widow, a dollar exchanged at N415.72, gaining N5.53 in three days. But year on year, the naira weakened by nearly one% in relation to the dollar, rising from N411 to N415.72. One of the Bureau De Change operators at Zone 4, Abuja, which is the hub of the forex sales at the Federal Capital Territory, Mohammed Isah, gave the price of dollar as N604/$. Lamenting that the rate had failed to fall after the primary elections. “We expected to see more dollars in the market after the primaries, but nobody is selling. That is why the rate is still the same for more than a week,” he said in pidgin English.
Another BDC operator, Usman Dantata, who was willing to sell at N603/$, said many individual buyers who wanted more than $5000 were unable to get it. He said it is due to a worsening scarcity being experienced in the market. Nigeria is experiencing one of its worst FX crises in history due to demand overshooting supply. Oil price has risen above $110 per barrel in the last two months owing to Russia’s invasion of Ukraine. But Nigeria has failed to increase its earnings from it due to oil theft, low production and an opaque subsidy regime which will gulp N4 trillion this year.
The country is not earning enough from its non-oil exports either. Crude oil made up over 76.22 per cent of this amount, while the non-oil was 23.78 per cent. Non-oil exports were around $10.836bn, which was one-third of what Bangladesh made from garments that year.
Investment analyst at United Capital, Ayorinde Akinloye, said, “ I would rather keep my dollar now than sell. Why would I sell when it can get to N650-N700 in another three months?” Individuals are not selling; CBN is not selling. At the start of the year, the dollar was N565.” He urged the CBN to allow domiciliary account holders to do transfers.
He stressed the need to support industries that were exporting while paying less attention to importation, noting that becoming an industrialised nation would solve all the FX crises facing the economy.
-Punch.