As Nigerians await the new forex rate which takes effect tomorrow,
Experts have predicted that the new interbank forex trading rate will range between N260 and N280 to the dollar.
The Central Bank of Nigeria announced on Wednesday that it would remove pegs on the naira to allow market forces to begin to determine the true value of the currency against other currencies across the world.
At a meeting with CBN officials and bank chief executives at the weekend, banks requested customers to send them pending letters of credit (LCs) for them to resubmit and to quote a rate at which they want to buy dollars, with many of them submitting bids between N210 and 290 to the dollar, a source said.
The Central Bank had pegged the naira rate at 197 to the dollar in the last 16 months after a slump in oil revenues hammered public finances and its foreign reserves. But the currency trades at around 355 on the parallel market.
According to the CBN, there is a $4 billion backlog of demand in the market which could take three to four weeks to clear.
However, speaking in separate interviews with newsmen yesterday, Alhaji Aminu Gwadabe, president, Association of Bureau de Change Operators in Nigeria (ABCON) and Dr. Frank Jacobs, president of the Manufacturers Association of Nigeria (MAN) said the new official forex rate was okay at N280 to the dollar.
According to Gwadabe and Jacobs, the interbank forex rate would be N280 at the minimum.
Expatiating, Gwadabe who is miffed that the new policy regime may have practically shut the doors on bureau de change operators, said: “The present dollar liquidity situation in the economy cannot support the primary dealer structure, which encourages inflow of dollars from abroad not to be buying the limited available dollars of the CBN and circulate in the economy.”
Besides, he said the new forex policy was medicine after death as it has already created cartel and monopoly to select a few in the financial market.
Gwadabe who hopes the new forex policy would work, said if allowed to stand as it is it may breed round tripping on the long run.
The ABCON boss who hinted that its members hope to float a primary market dealership of about $600-700b in the future, said it would convey an emergency meeting among its members on Tuesday and Thursday to look for a way out.
In the view of the Lagos Chamber of Commerce and Industry’s Director- General, Mr. Muda Yusuf, the new FX policy is in line with the position consistently canvassed by the organised private sector in the past 18 months.
“The policy is a major incentive to exporters as they will have unfettered access to their export proceeds. Besides, the Federation Account will benefit from better revenue inflows from the CBN as sale of subsidised forex comes to an end,” he said.
Speaking on the implication of the new forex policy, a financial analyst with one of the new generation banks, who asked not to be named said: “This could be wide-ranging and we will know more as details emerge after the press briefing. However, we can only but conclude that the end of the black market is near as anyone and everyone can now buy dollars at any bank or with authorized dealers at a price that is market determined.”
Experts believe that flexible exchange rate regime could see the Naira fall temporarily or spike even higher.