The naira continued its downward spiral on Tuesday, trading at the parallel market between N1,005/$ and N1,025/$. This represents a record low for the Nigerian currency, which has been losing value since the Central Bank of Nigeria (CBN) adopted a flexible exchange rate regime in June.
The Bureau de Change (BDC) operators who spoke to The PUNCH said that the naira exchanged for the dollar at different rates depending on the location and availability of the dollar. They said that the naira was falling because the demand for the dollar was higher than the supply.
A BDC operator in Lagos, Yusuf Kareem, said that he bought the dollar at N1,005/$ and sold it at N1,025/$ on Tuesday. He said that the money was still scarce and that the value of the naira was dropping.
Another BDC operator in Lagos, Musa Yunus, said that the naira traded at N980/$ two weeks ago, but it was N1,020/$ on Tuesday. He said that he did not know what would happen tomorrow because the naira had not been coming down.
Another BDC operator in Lagos, who simply identified himself as Idris, said that he was not sure if he could sell up to N1,000 to anyone because it was not available. He said that he bought the dollar at N1,000/$ and sold it at N1,015/$.
Babangida, another BDC in Lagos, said that he sold the dollar at N1,010/$ and bought it at N1,000/$.
However, the Assistant Provost of the Association of Bureau De Change Operators (ABCON), Zone 4, Wuse, Abuja, Muhammed Nera, said that the rate closed at N1,015/$ on Tuesday.He said that he bought the dollar at N1,010/$ and sold it at N1,015/$. He said that he could not say what the rates would be today.
On the Investors & Exporters (I&E) forex window, official figures from the FMDQ showed that the naira fell slightly and closed at N765.83/$ on Tuesday from N765.02/$ on Monday. The official market recorded a total turnover of $60.30m.
The forex crisis has taken a toll on businesses, especially small and medium enterprises (SMEs) and manufacturers, who rely on imported raw materials and equipment. They have expressed concern about the impact of the naira depreciation on their production costs, sales, profits, and jobs.
The Nigerian Association of Small and Medium Enterprises (NASME), South-West, said that many SMEs were facing the risk of closure due to the forex crisis.
The chairman of the association, Dr Solomon Aderoju, said that SMEs were struggling to get raw materials, pay back loans, and compete with foreign products.
He said that the purchasing power of consumers was eroding and that people were not buying locally made products. He also said that the SMEs were worried about the African Continental Free Trade Agreement (AfCFTA), which would expose them to more competition from other countries.
The Nigerian Economic Summit Group (NESG), a private sector think tank, also warned that the forex crisis would affect the growth and competitiveness of the manufacturing sector.
The chairman of the group, Mr Asue Ighodalo, said that manufacturers were finding it difficult to access forex at the official rate and that they had to resort to the parallel market at exorbitant rates.
He said that this would increase the cost of production and make Nigerian products uncompetitive in both the local and international markets.
He urged the CBN to review its forex policy and ensure adequate supply of forex to the productive sectors of the economy.
The Manufacturers Association of Nigeria (MAN), which represents over 2,000 manufacturers in Nigeria, also lamented the forex crisis and its implications for the industrial sector.
The president of the association, Mr Mansur Ahmed, said that manufacturers were facing challenges in sourcing forex for raw materials, machinery, spare parts, and other inputs.
He said that this had led to reduced capacity utilisation, low output, high inventory, loss of market share, and loss of jobs. He appealed to the CBN to prioritise forex allocation to the manufacturing sector and create a special window for manufacturers to access forex at a reasonable rate.
The Chairman of the Nigerian Economic Summit Group (NESG), Mr Niyi Yusuf, also identified some major consequences of the declining naira value. He said it would lead to increasing imported inflation as prices of imported items would increase while also increasing export income in naira for those who export goods and services.
The Director-General of Nigeria Employers’ Consultative Association (NECA), Mr Adewale Oyerinde, said the primary focus should be how the government would address the challenges related to foreign exchange.
A facilitator with the NESG, Dr Ikenna Nwaosu, said many companies would shut down because of this. He said it would lead to some companies shutting down, unemployment, and a rise in the price of petroleum.
The House of Representatives on Tuesday directed the Committee on Banking Regulation to probe the use of the dollar and other foreign currencies as legal tender for domestic transactions in Nigeria. It also called on the CBN to address the impact of the failing Naira against the Dollar and other currencies by implementing monetary policy adjustments to stabilise the currency, address speculative activities in the forex market, and increase the withdrawal limit of the naira to reduce the pressure on dollars and other foreign currencies.
The CBN has maintained that its forex policy is aimed at preserving the external reserves, stabilising the exchange rate, and curbing inflation. The apex bank has also introduced various interventions and measures to ease the forex pressure on businesses and individuals. However, these interventions have not been enough to meet the huge demand for forex in the country.
