ABCON Boss Calls for Patriotism as Naira Hits N510/$ on Parallel Mkt

The naira hit a new low on the black market on Wednesday just as the President of the Association of Bureau De Change of Nigeria (ABCON), Alhaji Aminu Gwadabe urged members of the association to help stabilise the currency.

The ABCON boss said the continued weakness of had become a “major concern” for the central bank.

The fell to N510 to the dollar on the parallel market yesterday, weaker than the N507 to dollar it was the previous day. This is even much weaker than the official naira exchange rate of N305.50, which has been trading at since last August.

“The growing spikes in the parallel market to over 500/$ is becoming a major concern to the central bank ... and detrimental to the cordial relationship existing between us and regulators,” Reuters quoted Gwadabe to have said.

The central bank normally sells around $8,000 a week each to some 3,000 licensed retail operators, who resell to individuals and small businesses for a marginal profit.

While these operators account for less than five per cent of all foreign currency trading in Nigeria, they help drive the currency’s exchange rate due to the scarcity of dollars on the official channel.

However, they have tended to buy dollars from private sources and resell at a much higher margin, fuelling the black market but weakening the naira.

Gwadabe urged ABCON members to stick to the reference rate of N399 per dollar set last month to stabilise the currency market and reduce the 40 percent gap with the official interbank rate.

The naira’s official exchange rate weakened by a third last year, and the currency has continued to hit fresh lows on the black market since last week, crossing the N500 line on the unapproved retail market as traders tested new levels to lure dollar holders to sell.

Gwadabe told his members to comply with the reference rate to enable them to benefit from “more volumes soon to be communicated by the central bank”.

The government has been pressing retail operators to narrow what it has described as a damaging gulf between the official and parallel exchange rates. Low prices for oil, Nigeria’s main source of income, have triggered a currency crisis and tipped the economy into its first recession in 25 years.

On the official interbank market on Wednesday, lenders traded only $1.95 million by the market close as the central bank, the main supplier of dollars, continued to ration the U.S. currency. Central Bank Governor Godwin Emefiele had said the bank was looking at ways to boost dollar liquidity on the official market to support the naira. He had also said the bank does not intend to devalue the currency.