EFCC Launches Crackdown on Forex Speculators as CBN Slashes Banks’ Allocations

In a recent report Gistlover gathered that Banks were experiencing a dollar scarcity as a result of the Central Bank of Nigeria’s reduction in their foreign exchange allocations.

Several bank representatives informed one of our correspondents that they were unable to satisfy their customers’ demand for foreign currency for things like school fees and personal travel allowances.

The disparity between supply and demand has widened. One of the top officials of a tier-1 bank told The PUNCH that only the CBN will intervene and supply additional foreign exchange shortly.

“We have been without allocation for a while now. Another bank representative added, “They do delay in giving occasionally.

The CBN has significantly decreased its currency allocations, according to additional bank sources who also corroborated the information to our reporter

On Monday, the CBN announced that it would put out efforts to stop the naira’s decline.

But on Tuesday, the naira strengthened on the black market as the central bank announced it would intervene in the ongoing decline of the domestic currency.

Acting CBN Governor Folashodun Shonubi stated that speculative demand was also a part in the fluctuation in the parallel market on Monday, after updating President Bola Tinubu on what the bank was doing to stop the naira’s decline.

However, some Bureau de Change employees who talked with The PUNCH claimed that on Tuesday, the naira, which had previously been exchanged for the dollar at a rate of 956/$ on Monday, was now worth 925/$.

A BDC operator, Alh Alli Kareem, said, “Today, we bought and sold the naira at 915/$ and 925/$. They are saying they will pump more dollars into the economy but, we are still waiting.”

The naira closed at 774.77/$ on Tuesday after opening at 785.89/$ and reaching a high of 799.90/$ on the Investors & Exporters window. It closed at 764.68/$ on Monday.

Dr. Sam Nzekwe, a former president of the Association of National Accountants of Nigeria, stated that the CBN’s participation may only be temporary and may not be sustainable.

He said, “People don’t have confidence in naira again; when people have money, they go to the BDCs and buy the dollar and keep. The best intervention they can do is to see how they can get the economy to be productive, but now, we are importing a lot.

“If they are saying intervention, is it the dollar you have or the one you don’t have? I don’t worry that the CBN floated the naira, but it cannot defend it.”

It would be recalled that in July 2021, the CBN discontinued dollar allocation to the BDCs, but continued through the Deposit Money Banks.

Meanwhile, the Federal Government may in the coming weeks clamp down on Bureau De Change operators,

Sources close to the matter, hinted to our correspondent that the operatives of the Economic and Financial Crimes Commission might go after currency speculators whose activities have been putting pressure on the local currency.

 “The Federal Government is planning to clamp down on operators of Bureau De Change across the country. Although they are businessmen, they are also part of the problem due to the rate at which they greedily hike rates to make profits. The current rates are not market driven but speculative, and that is why the government said they would intervene,” the source said.