The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has warned local and foreign investors from sourcing their foreign currency needs from the black market as dollar scarcity continues to be a major challenge in the forex market.
Emefiele, in a report by Reuters based on a video recording was quoted as maintaining that continued patronage of the unofficial market by investors was overheating the forex market, thereby weakening the monetary authorities’ efforts to sustain Naira exchange rates stability. He cautioned: “Don’t go there it is not good for you. You would lose money because you would have bought at a price that is not realistic.”
The banker, therefore, advised investors in need of forex to be patient, assuring that dollar demand would be met in an orderly manner. Over the past two months, the impact of the COVID-19 pandemic on the Nigerian economy and the forex market has been far-reaching as dwindling earnings from crude oil export have remained a major threat to the nation’s micro and macroeconomic stability.
For instance, the oil price crash has worsened dollar shortage in the country, compelling the monetary authorities to drawdown on the foreign reserves to meet urgent forex market and other obligations. As the demand for the greenback other foreign currencies continues to surge amid lingering shortage partly linked to some investors trying to exit the country, the apex bank this month weakened the naira on the derivative futures market. Only last Monday, Fitch Ratings projected that Nigeria’s foreign reserves would decline to about $23.3billion by the end of this year as the prospects of foreign exchange inflows into the economy remain not so promising given the volatility of crude oil prices.
