Nairametrics| The Federal Government has made no secret of its displeasure at the existence of a black market for the trading of foreign exchange, blaming this market for the inefficacies of its fiscal policies. The naira is trading on the parallel market some 40 per cent lower than the official rate. The central bank (CBN) scrapped a 16-month-old peg of N197 to the dollar in June, but it continues to trade in the official market, so that the naira remains far stronger against the dollar there than on the parallel market. As such top government officials in the financial sector have come out to say that the FG is doing all it can to ensure that the black market is eliminated.
The first direct pointer to this was the response of the Minister of Finance to a question about manufacturers not getting incentives to produce given an arbitrage [the simultaneous buying and selling of currency in different markets in order to take advantage of differing prices]. She said “The CBN is working on the elimination of arbitrage.” Similarly, a top CBN official, Isaac Okorafor, said the central bank was working towards “ensuring that the forex market operates as effectively as we would envisage” while the aim remains to “ensure there is no black market”.
However, through all these statements threatening a clamp down on the black market, none of the government officials have said exactly how they intend to deal with the issue. While this may be in an effort to prevent operators in the black market from developing counteractive strategies, remaining mum on the methods may also backfire if critical aspects of whatever method they seek to use contravene existing laws or inadvertently worsen the already dire situation of the country. The recent se of security operatives o black market dealers comes to mind with its ineffectiveness and the effect on the Naira’s value still fresh in Nigerian minds. It’s a dicey game that the CBN is prepared to play.
