The value of the naira has remained stable at the interbank market but many Nigerians have continued to groan over the dwindling value of the local currency as only a few have access to cheap foreign exchange.
Whilst the value of the naira at the interbank closed at N197 to the dollar on Friday last week, bureaux de change and black market sellers of the foreign currency are pricing the naira at around N250 to the dollar.
Some Nigerians who spoke with Leadership complained that they now have to pay more despite the fact that the economy has been almost at a standstill in recent months.
A professional, Seun Olukoya, whose wife is in the United States, said that he now has to pay more to get dollars to send abroad to his wife.
“It has become even more expensive for me to continue to send money to my wife and I just can’t wait for them to return home soonest. The high cost of foreign exchange is being made worse by the fact that business have been slow but I am hoping that business and the value of the naira will pick up after the election this month.”
The dwindling value of the local currency has also affected the price of imported goods as cost of importation had risen. Although, the Central Bank of Nigeria (CBN) has promised to meet genuine foreign exchange needs, many goods are still brought into the country at a high cost. Mrs Ola Sodiyan said she had to put a hold on completing her building. She explained that although she has finished the construction of the building, the high cost of furnishing and appliances for the new building was more than she could afford.
“When I go to price these appliances, the traders tell me that the price of everything has gone up because the dollar is now expensive. I cannot afford it, so I am hoping that probably after the election, everything will return back to normal,” she said.
Jubri Abdul, a black market foreign exchange (forex) dealer lamented that getting foreign currency has become more tedious as he can no longer buy from banks but have to rely on individual customers. He noted further that he barely makes profit from the sale of forex.
The CBN last month scrapped the retail Dutch Auction System (rDAS) where it sells dollars to banks, importers and BDCs as the gap between the CBN rate, interbank rate and parallel market rate widened. Consequently, the naira has hovered around N198 at the interbank where the apex bank intermittently intervenes but has continued to lose value at the parallel market. Data from the CBN show that official reserves decreased by $2.9 billion in February to $31.4 billion. The fall could be divided between $1.8 billion before the CBN announced the abandonment of the rDAS on February 18, and $1.1 billion afterwards, indicating a lower drawing on official reserves during its interventions at the forex market at its clearing rate.
The reserves have further declined within the first week of March to $30.85 billion as at March 4, 2015, according to latest data on the website of the CBN. Nigeria’s external reserves are sufficient to provide 7.3 months’ cover for merchandise imports and 5.1 months when services are included.