By Gbenga Adedayo
Worried by dwindling value of the naira which has defiled all measures put in place to stem further slide, the Central Bank of Nigeria has said black market is illegal, and cannot dictate value of currency.
Nigeria’s official exchange rate should not be determined by the parallel market where the naira value has weakened to a three-month low, says CBN.
“We do not agree that the determining factor for our currency should be based on a market that is tainted, where people go to offer bribes,” Central Bank Governor Godwin Emefiele said Tuesday in a virtual monetary policy committee briefing from the capital, Abuja.
The local unit changed hands at 483 naira to the greenback on the parallel market on Tuesday, according to abokifx.com, a website that collates street rates in Lagos. That compares to the 386.16 on the spot market as at 3:55 p.m local time.
Low liquidity in the much cheaper official window means that those who need dollars patronize the parallel market, making the greenback more expensive. The International Monetary Fund has urged the central bank to allow more flexibility in its preferred window to reduce the demand in the parallel market.
“The black market is illegal where people do not provide documentation to support transactions. It is unfortunate and unfair for analysts to say Nigeria’s exchange rate is at 480 per dollar,” the Governor said.
A depreciation of the local currency by 24% this year is huge compared to other countries like India, Indonesia, Russia or South Africa, Emefiele said.
-With additional reports from Bloomberg