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CBN probes forex utilisation over crashing naira value

Faced with an unbridled demand for the dollar at the foreign exchange market, forex, leading to  consistent crash in the Naira, the Central Bank of Nigeria, CBN, has launched an investigation into utilisation of foreign exchange bought from its official outlet, the Wholesale Dutch Auction System, WDAS, by end-users.

It was learnt that CBN Governor, Mr. Lamido Sanusi and his team were concerned about the rising demand with its negative consequences on the value of the naira and,  decided to take steps to stem the tide.

CBN has always requested strict compliance to regulations guiding utilisation of forex, warning that breaches would be sanctioned appropriately, including suspension of dealership licence.

Exchange rate at the CBN’s official market as at the close of business last week stood at about N154.60/$1 after it hovered around N150/$ 1  – the 2011 budget forex estimate.

At the parallel market, the naira weakened to its lowest value against the dollar at N164/$1 at the end of last week. It was N161/$1 at the beginning of the week.

Similarly, the Naira which exchanged at N162/$1 at the interbank market at the middle of the week, fell to N164.20/$1 at the close of business, last week.

Analysts said the indication from the CBN governor who was reported to have said he won’t defend the local currency at all costs could have triggered further fall of the Naira.

Vanguard had recently reported that the naira has been projected to further depreciate in the coming years and may exchange for N202.7 to a dollar by 2015, according to International Monetary Fund evaluation of Nigeria macro-economic indices.

Projection by the multilateral institution said that in 2009, the naira will exchange on the average for N148.7 to the dollar while in 2010, it will go for N149.9 to the dollar.  In 2011, the naira is projected to exchange for N155.1 to the dollar and in 2012, it will exchange at N166.1 to the dollar.

IMF further indicated that in 2013, the exchange rate of the naira will depreciate further to exchange for N177.7 to the dollar and that in 2014, it will exchange for N189.9 to the dollar and in 2015, N202.7 will exchange for one dollar.

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