Nigerian security agents raided the offices of black market currency dealers on Thursday, detaining several of them while ordering others to sell dollars at a lower rate in a bid to check the persistent crash of the currency, dealers said.
The security agencies’ intervention was coming in the wake of the central bank’s inability to stop Naira’s slide on the black market where importers often go to buy dollars due to severe hard currency shortages in the country. The economy has been pushed into recession partly by a slump in oil prices a key source of revenue that has the added attraction of coming in the form of dollars.
The central bank has kept the official naira rate to the dollar artificially high, effectively driving hard currency dealing away from commercial lenders and towards the black market, the real benchmark.
“The police and state security service officials are raiding black marketers in Lagos and Abuja to compel an appreciation of the naira,” Mallam Adamu, a Bureau de Change (BDC) operator, told Reuters.
Another trader said security agents visiting BDC operators told dealers not to sell dollars for more than N395.
“We’ve stopped buying dollars from just anybody that walks into our shop due to the harassment from security agents and a directive from our association,” said a dealer, asking not to be named.
The currency is exchanging at N460 per dollar on the black market, far weaker than the official rate of N305.5. The naira had regained some ground this week after dropping earlier from N470, but dealers said hard currency supplies remain limited.
Aminu Gwadabe, President of the Bureau de Change Association, said members of his association had agreed with the CBN and security agencies to enforce a rate of N390 to N400 to the dollar.
“The issue of naira depreciation has been narrowed to the activities of speculators and we have decided, with the cooperation of both the central bank and security agents, to enforce a new rule on pricing,” he said.
The Lagos police declined to comment while source at the central bank said the bank was concerned about the spread between the official and parallel market rate.
Meanwhile, BDC operators told the NAN yesterday that they were forced to fix sales of foreign currencies such as dollar, pounds and euros for fear of sanctions by anti-graft agencies and the Central Bank of Nigeria.
For the past three days, naira has been exchanging for N400 to a dollar at the parallel market.
A Licensed BDC operator in Abuja, Alhaji Yusuf Rabiu, said the recent raid on BDC establishments by the Economic and Financial Crimes Commission (EFCC) forced the operators to reach such an agreement.
Also, it was agreed that pound sterling would exchange for N540 and euros for N500. Usually, the rate of forex at the BDC segment is based on demand and supply.
When demand is higher than supply, each operator uses his discretion to hike the price.
To regulate the segment, CBN recently issued a policy that allowed each BDC to buy dollars from Travelex at N381 per dollar and sell to end users at a maximum of N400 per dollar.
On Wednesday, the Department of State Services (DSS) raided the offices of some BDCs in Lagos and arrested operators selling above the stipulated exchange rate.
The DSS operatives posed as end users who came to purchase dollars from the BDCs. After surveying the market for exchange rate offerings, they arrested some BDC operators who sold above the CBN agreed rates.
“On Monday, EFCC called so many licensed BDC operators. The issue is that they feel we are unnecessarily hiking the rates. But it’s not our fault. Right now, their focus is on our business; they have been calling us one by one and we don’t want problem. That is why we have agreed to have a fixed rate for now,” he said.
“After the raid in Lagos, we the Abuja operators met and agreed on a fixed rate so that such will not happen to our members.”
Another operator, who preferred anonymity, said the market was slow as people who had dollars were not ready to sell at the existing rate.
He said personally, he had temporarily closed shop to potential customers until he studied the market for the next couple of weeks to determine if the new policy would come to stay.