In what sometimes read like a sponsored article, the Nation reports that the CBN has a grand plan to reduce the disparity between the official and parallel market rate to a premium of just N3. That is, the Parallel market rate should trade at N200 compared to the official rate of N197.
How they plan to achieve that?
According to the article which quoted a top source at the bank;
“The CBN has the capacity to sustain the downward pressure and will deploy further currency management initiatives, while capitalising on fiscal policies of the federal government to remain in support of non-devaluation of the Naira. The current stand of the federal government on Nigeria’s legal tender is Non-Devaluation. It will be unwise for anybody to be hoarding dollars because we can assure you that naira appreciation is going to trend upwards going forward.”
The threat continued with the “top source” noting that “most of the imports that were draining forex resources have since found local substitutes with attendant savings in forex and shortage of demand for the greenback, which was fueling the pressure, this is also coming on the heels of the CBN instruction to commercial banks to publish allocation of forex to end-users. This has in recent times ensured that the real sector of the economy and genuine users for education and medicals have been able to access Forex at official rate.”
The CBN also claimed that its decision to publish all forex sales from the inter-bank market to make for transparency was also one of the reasons why the exchange rate strengthened at the parallel market.
It’s obvious that the currency war is in a dangerously new phase with the CBN doing all it can to control demand. They have boxed importers of goods and services to a tight corner by stifling them of forex. Importers are also wary of the black market and cannot buy dollars at such a high disparity between the official and black market rate. For them, it appears a price above N250 could likely make their business proposition unviable.
Speculators are not budging either and will continue to short the naira provided that the disparity still exist. A lot have made huge profits and have built up a high margin of safety to take more risk.
Parallel market operators obviously do not like the volatility they are seeing and surely want a bit of stability at the black market. It’s risky for them to buy dollars at any price when they know that the value can drop drastically in a matter of minutes.