June 25, 2024

Central News

at the center of it

Recession Beckons As Banks Scramble For $

As of January 2023, the dollar was trading against the naira at N450/$1. Today however the dollar is  now currently trading the naira at N774/$1, which has therefore now made it scarce leaving Nigerians at the mercy of the black market traders who charge exorbitant exchange rates.

As the naira continues this steep decline, inflation rates hit the roof as Nigerians ponder the fate of the Nigerian economic structure. This decline is causing the number of citizens who want to emigrate to swell astronomically.

Banks are having extreme difficulties in satisfying the dollar needs of their customers across all spectrum of the society.

According to a report by Nairametrics on Monday “A young Nigerian whose name was simply given as Adebisi set to migrate to Canada for good, found himself in a precarious situation when he visited the bank to purchase Personal Travel Allowance (PTA) with his July salary.Having already sold all his belongings to fund his move and converting the proceeds to forex, he had hoped to save around N450k by buying at the official Investors’ and Exporters’ (I&E) window rate, which averages at N775/$1, rather than resorting to the black market rate of N870/$1.However, upon reaching the bank, he was met with disappointment.The bank informed him that they were unable to fulfil his request due to supply-related challenges and suggested he seek out the black market instead.”

Tobi Amosu, a Lagos-based businessman, told Legit.ng that he could not get enough dollars to pay his daughter’s school fees from official sources. He said:” I was told at the bank that there was not enough forex for everyone and so, the banks needed to ration the distribution to customers.”

The Central Bank, in its efforts to manage the forex market, had assured that PTA and other invisible transactions would continue to be accessible through banks at the prevailing I&E window rate.The current predicament faced by Adebisi and countless others looking for dollars is a symptom of the prevailing dollar scarcity that has enveloped Nigeria.

During the last monetary policy committee meeting of the Central Bank, acting governor Fola Shonubi acknowledged that the ongoing forex volatility is primarily attributed to the limited supply of foreign currency. 

The growing demand pressure on the parallel market has led to a significant widening of the gap between the official and parallel rates.Last week, the parallel market rate plummeted to as low as N870/$1, while the official rate remained at N775/$1. This growing divergence is now a growing cause for concern as it threatens the forex stability envisaged following the unification of the naira and the economic structure of Nigeria.