Amid growing demands for Foreign Exchange occasioned by inadequate supply which has seen importers with outstanding obligations storming the black market for foreign exchange, Central Bank of Nigeria, CBN Governor, Godwin Emefiele has warned that firms, individuals patronizing the black market do so at their own risk and stand to lose their money.
Emefiele in a video warned them to stop using black markets for foreign currency exchange, following the liquidity crisis triggered by low oil prices and shortage of dollars saying this action heats up the market.
According to him, patronizing the parallel market is helping to overheat the foreign exchange market.
Recall that Nigeria operates a system of multiple exchange rates in a bid to control demand for dollars. The system, which has been criticized by the International Monetary Fund, has kept the official rate at about N380/$1. The CBN uses this to supply cheap foreign exchange to government departments and select companies, including fuel importers. It created an importers and exporters window in 2017, in which the naira was allowed to weaken after an economic contraction in 2016.
However, in his statement, Emefiele warned against patronizing a window that was created by the apex bank.
“I know some of you are involved, stop now. By going to the parallel market, you are helping to overheat that market. Not only that, but you will also lose money because you would have bought it at a price that is not realistic.
I can tell you that you are going to lose money. But we have seen your account already. We are appealing to you, please stop and let’s do what is right, what is legal so that Nigeria can continue to be a good place for you and to live in” he said.
Speaking further, he said, “We are taking note of some of you and I can tell you, go ahead and do your business, nothing will stop your forward, your forward will be at a committed price, we are going to provide more liquidity in the market so that people can stop going to the parallel market. Don’t go there because it is not good for you. But be patient, it’s going to be orderly’’.
Recall that the country has been grappling with declining foreign exchange earnings while the demand for dollars has been on the increase without adequate supply, thereby putting a lot of pressure on the naira. Importers with outstanding obligations have scrambled for foreign exchange while the providers of foreign exchange, such as foreign investors, have exited the country.