Currency

The local currency last Friday exchanged at 240 to a dollar in Abuja and Lagos as the scarcity of foreign exchange persisted in the market. Within the last three weeks, the naira dropped by about 7.5 percent at the Bureaux de Change market while in the interbank market the local currency dropped by about 1.2 percent. Before June 23 when the CBN banned about 41 items from sourcing forex in the official markets, the naira stabilised at between  219 to 223 to a dollar in the BDCs but since then the value dropped sharply, Daily Trust learnt. A trader in Lagos, Abubakar Sadiq, said the drop of the naira was due to the forex scarcity, saying that there is virtually no auction by the CBN for importers. He said the only source are the BDCs which are not enough. He said even the BDCs are now monitored on who they are exchanging the currency. “This market is about demand and supply. The $30,000 weekly release by the CBN to each registered BDC will not be enough to satisfy the market,” he said. There are mixed reactions on ban of the 41 items in the forex market; for instance the Economists magazine said in an article recently that it found the policy baffling. “Central banks usually prop up their currencies if they are worried about inflation, or allow them to devalue to depress imports and stimulate exports. Nigeria, by contrast, appears to be set on achieving both an uncompetitive exchange rate and higher inflation.” But the President of Dangote Group, Alhaji Aliko Dangote  commended the apex bank’s policy, saying, “Nigeria cannot be importing poverty and exporting jobs’’. Dangote,who said the policy also affected his Dangote Rice, revealed that the measure would, however encourage his company to look inward and massively produce locally. to create jobs for the nation’s growing young population.