Posted by The PM News on
There was no respite for the naira today, as it continued to depreciate against the American dollar, the Euro and the British Pound Sterling.
There was no respite for the naira today, as it continued to depreciate against the American dollar, the Euro and the British Pound Sterling.
Today, the selling rate of the dollar at the bureau de change (BDC) stands between N137 and N140. Just last week, a dollar did not fetch more than N119. Similarly, the Pound Sterling that slipped to N182 last week, is now selling for about N190, a development that seems sudden and curious.
A BDC operators told P.M.News today, that banks were selling dollars to them at N135 as panic buying creeps into the forex market. 'The situation is so bad now,' a BDC operator in Lagos, told P.M.News. 'With panic buying, things can only get worse,' he added.
P.M.News investigations showed that the sudden appreciation of the dollar against the Nigerian currency is connected with the shortfall in the supply of the currency by the CBN. Hitherto, the CBN sold an average of $300,000 to each BDC, per week. But this week, the CBN made available $100,000 even on its own, increasing its selling rate by N12.
From N117 last week, the CBN first of all marked up its selling rate to N123 and then N129 to the BDCs. In an interview published in a national daily, Daily Independent, this morning, the CBN governor, Professor Charles Soludo, said there was no cause for anxiety on the depreciation of the Naira. He said the CBN was committed to a regime of foreign exchange stability.
In the same interview, the CBN governor admitted that the bank was responsible for the fall in the value of the Naira because of its under-supply of the dollar. Soludo said the bank shall meet the demand for forex, at the appropriate market-determined exchange, through intervention from today.
The Naira has enjoyed a regime of stability for the past two years because of Nigeria's huge foreign reserves of close to $60 billion. In recent months, the reserves have been dwindling as oil prices recede below $50.
Simultaneously, there are doubts about the safety of the huge reserves in the vaults of foreign banks where they are kept, as those banks, like Lehman Brothers and Citibank, face hard times.
Today, market watchers told P.M.News that the CBN may be facing a dollar crunch, which it is yet to admit. Analysts also point to the direct effects of depreciating Naira-higher costs of imports-which will translate into higher costs of goods in the local market.