Black market forex dealers sourcing dollars externally – ABCON

The president of the Association of Bureau de Change of Nigeria (ABCON), Aminu Gwadabe has disclosed that despite the closure of Nigeria’s land borders, black market foreign exchange (forex)dealers are sourcing dollars from neighbouring countries

Gwadabe, who spoke exclusively with Daily Trust said: “People are now crossing over to Togo, Benin Republic and Ghana to go and get dollar and come back to sell to local retail investors who are busy mopping up because of all the doomsday prediction by the international monetary organizations and analysts about the economy and the likelihood of further devaluation.”

The Nigerian currency had been hitting low levels on the over-the-counter spot and black markets since early March, after the CBN adjusted the Naira exchange rate by 15% as a result of dwindling oil revenues.

Checks at various black market forex dealer points  in Lagos, including Tejuoso market and around old Alade market on Allen Avenue showed  that the Naira was exchanging at between N460 and N470 to a dollar at the parallel market,  a sharp spike from the N420/ $ it sold last week.

According to the ABCON chief, the forward price is the one driving the spot rate, adding that until the spot rate touches N500, the forex speculators will continue because people now want to keep their savings in dollars to hedge against devaluation.

A check by Daily Trust revealed that the 21-month naira forward contract was trading at N509 per dollar on Monday, indicating that currency traders foresee the naira falling to that rate before the end of 2020.

Last month, Nigeria’s apex bank moved to merger the official and investors rates when it adjusted the Naira exchange rate from N307 to N360 to the dollar.

The CBN had also increased the rate for investors and exporters from N366 to N380 to the dollar on March 21, 2020.

Gwadabe expressed the association’s plea to the CBN to go beyond the three main sources of supply because of forex and look at relaxing some of the stringent money laundering regulations around forex inflow.

“We are not encouraging illicit money inflow, Let us borrow a leaf from Brazil which created amnesty for foreign exchange offshore repatriation”, he stressed.