How porous borders mar naira’s journey to stability

.As BDCs seek increased security surveillance on borders, airports

Facts have emerged that the nation’s porous borders including airports is responsible for the recent rebound in the Nigerian currency gains, as proceeds of illegal foreign currency evacuation floods Dubai market and marred naira’s journey to stability and sovereignty.

This is even as the Bureau de Change operators in the country through their President, Aminu Gwadabe, has said that for government to ensure the naira remains stable on its sovereign journey, there must quick review and increase security surveillance of the nation borders and airports.

It is however, worthy of note that in a bid to ensure the naira is stable and free from spikes, the Central Bank of Nigeria (CBN) on Friday ensured that over $31 million dollars intervention was disbursed to 3,135 BDCs nationwide by the bank through the International Money Transfer Operators (IMTOs) window and an inflow of $100 million in the interbank market.

Disclosing this in an exclusive conversation between the BDCs president and our correspondent over the weekend, Gwadabe explained that disbursements were as a result of the CBN policy to provide a level playing ground for different operators in the market, while removing disparity in applicable exchange rate, enhancing liquidity across all board and overall rate convergence.

“Ironically, this development did not help the naira from recovering as being witnessed previously in the market as naira reached an all high of N405 per dollar but eventually closed at N398 to the greenback as a result of the disbursements to BDCs later in the day” , he explained further.

The retail forex segment head noted that the reasons are speculators, renewed on slough on the naira. Return of illegal foreign currency cash evacuation through our porous borders and airports, as Dubai in UAE. Enjoy the Illegal evacuation, operators/players compromise, sales of debit cards by banks rather than cash, maximum $10,000 cash allowable for travelers at the nation airport.

However, Nigeria being an import dependent economy, strengthening of the local currency is said not be luck but a choice the nation have to make.

Gwadabe therefore advised the Federal Government to ensure the naira remains stable on its sovereign journey by creating special purpose window for foreign investors at the BDCs sub sector like that of IMTSO to diversify streams of foreign reserve.

He requested for more liquidity to the BDCs sector to ensure sector market liquidity and availability, adding that review of allowable margin should be up to N5 than N2 per US dollar.

“Monitoring and supervision by regulators and relevant agencies, as well as review the limit of max $10,000 allowable to $20,000 for travelers at our Airports, with localisation of our products and industries.

The retail forex segment head also called for media campaign and public awareness in order to achieve stability and sovereignty of the local currency.

It would be recalled that in an effort to curb activities of illegal international money transfer operators, the apex bank announced 33 licenced and authorised operators to remit money to Nigeria on behalf of Nigerians in the Diaspora.

According to the statement signed by the Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, “The attention of the Central Bank of Nigeria (CBN) has been drawn to the increasing patronage of illegal Money Transfer Operators by Nigerians in the Diaspora for the purpose of home remittances.

“These unscrupulous operators, who lure unsuspecting customers with ridiculous exchange rate, use Naira accounts opened in local banks ostensibly for legal business to pay out the proceeds to the beneficiaries while channeling the foreign currencies to fund the parallel market.

“This practice has led to non-reporting of such transactions to relevant authorities thereby undermining effective surveillance of the sector as well as leading to discrepancies in statistics on the transactions between countries of origin of remittance and the destination country, Nigeria.

“Against this background, Nigerians in the Diaspora are advised not to patronise unlicenced International Money Transfer Operators, as they stand the risk of losing their hard-earned money”.

Meanwhile, the naira for the first week in April was quoted at 405 to the greenback at the parallel market, but eventually closed the trading week at N398 -N400.

Last Monday, the local currency traded between 380 and 385 to the dollar at the same market, as the Central Bank of Nigeria (CBN) sought a convergence in foreign exchange rate across all segments of the market.

The bank increased its sales of forex to bureau de change (BDC) operators on Tuesday to $10,000 per week, and sold the dollar once a week to curb logistical issues.

After the sales to the parallel market, the naira appreciated slighted to trade around 380 to the dollar.
On Thursday, CBN auctioned $100 million at the interbank wholesales window, with the aim of meeting legitimate needs at that segment of the foreign exchange market.

Significant rise was also seen in the country’s foreign exchange reserves, which moved from $30.318 billion on Monday to $30.326 billion on Wednesday, after falling over the past week by a few hundred millions.

The reserves moved from $30,348,621,856 billion on March 23, to $30,296,992,832 by March 29, 2017, before the recent surge in April.