USD/NGN Closes at NGN605 May 19, 2022 As Parties’ Primaries Approach

Last updated on July 21st, 2022 at 01:09 pm

As Nigeria’s two major political parties warm up for primaries ahead of the 2023 general elections, more pressure is on the already pressurised Nigerian currency. It closed at NGN605 against the US dollar on Thursday, May 19, 2022, at the black market in major cities.

USD/NGN exchange rate closed at NGN602 a day earlier and the market opened at the same rate before the dollar gained more against the naira.

EUR/NGN closed at NGN625 while one Pound sterling could buy NGN745 at the parallel market, thereby making the forex policy ‘propounded’ by the CBN governor Godwin Emefiele a fruitless one after expunging Bureaux De Change operators from the list of FX buyers from the apex bank.

In the hit of the new BDC FX policy by the Central Bank of Nigeria in 2021, Emefiele who is now hungry to become Nigeria’s president threatened to ‘catch’ the owner of forex tracking website abokifx for using his platform to manipulate forex price.

Nothing positive has changed since almost a year after the militarized policy, and the naira continues to lose its value.

Political class influence the exchange rate in Nigeria

In one of our reports, we pointed out that the naira may not make any significant gain against global currencies in the FX market as All Progressive Congress (APC) and the Peoples Democratic Party (PDP) are warming up for primaries for candidates who would be flying the flag of their respective parties ahead of the 2023 elections.

Though APC and PDP have been playing a game of who blinks first by moving and re-scheduling their primaries, politicians, especially presidential aspirants are known to bribe delegates with foreign currencies during such elections.

Before the 2019 general elections, one of the presidential hopefuls allegedly handed out $5,000 to each of the delegates to lure them to get their votes.

The same highly monetised political system is expected as both major parties would come up with their flagbearer before the end of May 2022.

During such a huge gathering of delegates, it would be ‘unwise’ to carry NGN2.9 million equivalent to $5k for each delegate during the election, the reason for their choice of foreign currencies like pound sterling, US dollar, and the Euro.

Such foreign currency-monetized system will put pressure on a local currency. Although, the Association of Bureaux De Change Operators of Nigeria (ABCON) a few days ago wanted the CBN to create a special forex trading window for the ‘isolated’ BDC operators in Nigeria.

NGN605 to $1?

Nigeria’s FX policy has failed woefully. The Emefiele-led CBN management should be more worried about how to bring sanity to the forex market than the political adventure of it’s boss.

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