The Naira hit an all time low of N345 on Monday signalling more than ever the need to bridge the supply gap between the parallel and the official rates. The exchange rate which has risen from about N305 at the beginning of the month has now depreciated by more than 13% in less than two weeks. It eventually closed at N340 on Monday.
The recent spike is mostly attributed to the rumour that circulated last week that the government was going to ban sale of forex for payments of medicals tourism and school fees of foreign students abroad. This triggered a rush on the black market that has already been starved of funds due to the exclusion of the BDC operators from the CBN window. The Central Bank has denied any such plans even though insiders within the bank confirm that the decision was mulled sometimes last week.
In addition, the CEO of Access Bank, Herbert Wigwe has hinted that commercial banks were considering excluding sale of forex to people who needed it for medical tourism and school fees rhetorically asking “why must we spend so much money on children’s school fees overseas or medical tourism?”
The Central Bank on January 11 banned sale of forex to BDC operators citing activities of the BDC operators whom it claimed have gone from retail dealers of forex to wholesale dealers. It complained that instead of catering for retail users who needed about $5,000 they now transact in millions of dollars suggesting that the BDC source money from unscrupulous places. The CBN also noted that the BDC’s buy dollars from the CBN at N197 only to sell to their customers at N250.