Financial
experts said the naira would decline further, while private sector operators
described the move as a welcome development.
The
ban was announced on Monday, when naira trading at 285 against the dollar at
the parallel market from 278 on Friday.
The
Acting President, Association of Bureau De Change Operators, Alhaji Aminu
Gwadabe, told one of correspondents in a telephone interview that the currency
traded against the greenback at 300, 290 and 292 in Kano, Lagos and Abuja a day
after the CBN announcement.
“There
is cut of (dollar) supply to the market. The BDC sub-sector has been murdered.
We are not coping. The naira is going to head northwards. There is no solution
in sight,” Gwadabe lamented.
The
Head of Investment Research, Afrinvest West Africa Limited, Mr. Ayodeji Ebo,
said the stoppage of forex sale to the BDCs meant that the CBN wanted everybody
to apply to the banks for dollars.
He
stated, “But we feel the pressure now will move from the BDCs to the parallel
market. We will see significant spike in the value of the naira at the parallel
market because the little supply to the BDCs have also helped to cushion the
demand at the parallel market.
“It
will further compound or increase the spread between the parallel market and
the interbank market. So, it will also increase round-tripping and unethical
practices within the financial system.”
On
the lifting of the ban on cash deposits into domiciliary accounts, Ebo said, “I
am still sceptical about how this will work except they are also assuring us
that if you deposit it, you can consummate business with it.”
A
professor of financial economics at the University of Uyo, Akwa Ibom State, Leo
Ukpong, said, “I don’t think the stoppage of dollar sale to the BDCs will solve
the problem. The currency will depreciate some more.
“This
move will make the naira to weaken more as demand for dollar will skyrocket
because of the short supply.”
Members
of the organised private sector, however, applauded the CBN for the stopping
the sale of dollars to the BDCs and lifting the ban on cash deposits into
domiciliary accounts.
The
President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, said
industrialists had earlier kicked against the funding of the BDCs by the
central bank, adding that with the development, the forex could be channelled
towards funding the real sector in terms of importation of raw materials.
On
the removal of the restriction of cash deposits into domiciliary accounts,
Jacobs said manufacturers were still waiting for more clarification as to how
the money deposited could be utilised by the customers.
The
Director-General, the Nigerian Association of Chambers of Commerce, Industry,
Mines and Agriculture, Mr. Emmanuel Cobham, said the forex sale ban was a
welcome development.
According
to him, although the BDCs are necessary in the economy, they are licensed
entities and should, therefore, source for their own funds.
Also
speaking on the matter, the Director-General, Lagos Chamber of Commerce and
Industry, Mr. Muda Yusuf, lauded the forex policy review, noting that it had
addressed the concerns of economic operators.
According
to him, it is a source of worry that the CBN continues to maintain its official
exchange rate at N199 to the dollar at a time of dwindling forex inflow.
“The
pressure on the official window will persist. The risk of round-tripping and
distortions in the foreign exchange market will consequently remain high,” he
said.
Source: The Punch
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