Date Published: 08/29/09

N80 to 1 Dollar debacle; Bureau de change owners beg CBN governor

Some northern elders on behalf of bureau de change rushed to London to meet with the CBN governor over plans to flood the market with dollars. Present at the meeting where Alhaji Ibrahim Adamu, Mallam Isa Yakubu, Alhaji Bako Dankari, Alhaji Yahaya Abdullahi, Alhaji Idris Abubakar and Mallam Magagi Jubril. Their mission focus was to prevail on the governor to withhold action on the plan to flood the foreign exchange market with dollars was, however, not fruitful as the governor declined their request. The governor nonetheless, counseled them to orient their members on the need to desist from the rampant sharp practices in foreign currency market and adhere to the CBN guidelines on foreign exchange trading.  While confirming that government intends to strengthen the Naira, the Apex Governor however refused to disclose more information about the timeline or procedure.

CBN offices and banks have been flooded with inquiries from worried customers since the report leaked that the central bank had concluded plans to flood the exchange market with dollars to stem the depreciation of the Naira against the dollar and subsequently, peg the Naira at 80 to 1 USD Dollar. It will be recalled that only two months ago the Apex bank intervened in the exchange market to halt the fall of the Naira and resulted in the significant appreciation of the Naira.  Expressing sympathy with the the bureau de change owners, a financial expert Dr Aliyu Ademola of First Securities Ltd, foresees the CBN capitalizing on the window of reform in banks to regulate other economic sectors by influencing the exchange rate, which has far-reaching effects on the broad economy. He explained further that, with commercial banks on the ropes due to liquidity crises coupled with the fall in demand for foreign exchange by importers, the CBN- buoyed by increase oil revenues, appears set to rapidly shore the Naira’s value by eliminating the loopholes exploited by banks and currency speculators in the past to engage in round-tripping.