Politicians’ high demand for dollar blamed for high exchange rate

Bureau De Change (BDC) operators in Abuja have attributed the high demand for dollars by Nigerians, especially politicians, to the cause of the high exchange rate in the country.
To them, politics is the major cause of the high demand.
At the BDC market, the naira has been trading between 217 and 220 for selling and buying rates.
One of the operators at the Zone 4 BDC centre in Abuja, Mr Adamu Usuma, said many people had recently been demanding for dollar.
“I think it is because this is the season of politics; that is why everybody is looking for dollars, but I also think that Nigerians just like to have dollars.
“Some of the people that come here to buy, if you ask them, they say they want to have their money in foreign currency,’’ he said
Usman said that the CBN had even paid extra money to see if the situation would change but noted that it seemed worse.
CBN recently sold extra $30,000 to BDC to help strengthen the market after which it also closed the Retail and Whole sale Auction system to help stabilise the currency.
The apex bank gave the assurance that legitimate and genuine needs by dealers would be met by the bank.
Another operator, who preferred anonymity, said that the major problem was that people were hoarding the foreign currency for fear of the unknown.
“The way it is right now, people come here to buy to keep the money in their homes. Even if CBN pumps in millions of money now, it will not be enough.
“The government is trying; apart from politicians who we know that really use this money now, government should find a way to reduce the demand to help the naira,’’ he said.
Also, Charles Ugochukwu, another operator, said that the happening in the market was simple economics of demand and supply.
He added that some of the CBN’s decisions contributed to the situation, saying“what they sell to us is not enough to meet the demand of the people.
“So, we source this money from anyone that has inflow of cash and is ready to sell at good rate and then we sell at the price favorable to our business.
“That’s why you see dollar going up every day’’.
He said in the past, the CBN auctioned up to $400,000 weekly and there was enough money in circulation but now, it sold only $30,000 weekly at N190.
He said that though the oil price and other things affected the market, the apex bank must ensure total control of the situation.
Meanwhile BGL, an investment banking company, has commended the CBN’s closure of the Retail and Whole sale auction foreign exchange window.
The company, in its report, said that the development would help to control speculators and pressure to the currency.
It advised the CBN to disclose its strategy to meet legitimate and genuine demand of the foreign exchange to dealers.
At the inter-bank foreign exchange window, the naira has been trading between N199 and N197 to a dollar since the closure of the retail and whole sale auction system.