Rumours that the Central Bank will soon stop the provision of foreign exchange for school fees and medical bills and speculators who expect that the naira will continue to fall are driving up demand for the dollars in the black market resulting in a free fall of the naira, Money Issues can reveal.
The naira sold for as low as N360 to the dollar in the unofficial market on 16 February as individuals and businessmen tried to stock pile the dollar amidst acute scarcity of the green back.
Already, Money Issues has been told that some banks have started rejecting applications for foreign exchange from individuals requesting it for school fees and medical bills.
At the Banker’s committee meeting on 11 February, bank managing directors of banks and the Central Bank of Nigeria (CBN) reached an informal agreement to de-emphasize sales of dollars to those seeking it to pay for school fees and medical bills.
Though the bankers said that they reached the decision so at to redirect the scarce dollar supply to more needed areas like manufacturers, people in the financial industry say it is because of the rising suspicion that people are diverting dollars claimed for school fees and medical bills into the black market to make a kill from the huge differential that has arisen from the CBN’s decision to keep the naira pegged at N197 to 199.
Those able to a divert the dollar from the official market to the black market could pocket a difference that is as high as N161 per dollar, a profit margin that is difficult to resist.
Thus the increasing differential between the official and black market rate have created a huge incentive for the privilege few with access to the dollar to divert to the unofficial market and pocket the difference.
There are unconfirmed speculations that even manufacturers that are able to have access to the official dollar, turn around to sell it to their bankers and pocket the difference rather than import the goods or services for which they were allocated the scarce dollar.
