Naira Weakens to N600/$ at Parallel Market as Politicians Mop Up Dollars

Kayode Tokede with agency report

Politicians stocking up dollars ahead of political parties’ primary elections over the weekend have driven the naira to a new low of N600 to a dollar on the parallel market.
A Bureau De Change (BDC) operators, Abubakar Mohammed, confirmed the current rate of the greenback to Bloomberg. The present parallel market rate is the lowest the currency has traded this year.
The official naira rate was N415.95 as of Wednesday. The parallel market thrives on shortages, which has helped drive the gap in the two rates to above 40 per cent.
Politicians competing for support from delegates in the party primaries are creating massive demand for dollars in cash, Mohammed said by phone.
“Demand is not going to abate soon, which means more pressure for the naira, and also because dollar supply is very low,” he said.
Former governor of Anambra state and a presidential aspirant under the Peoples Democratic Party (PDP), Mr. Peter Obi, recently expressed worry over the diminishing value of the naira.
Obi who was guest on the ‘Morning Show’ on Arise Television, while speaking on the decreasing value of the nation’s currency on the parallel market, said one of the most important ingredients of a nation was the respect people have for their currency.
“Currency is the measure of faith and trust of citizens of a nation, it is the measure of productivity. It is very worrisome that government officials who are supposed to be the protector of our local currency have abandoned the currency and are now spending dollars.
“I find it worrisome that while our manufacturers, business people are not getting dollars to bring in critical goods into our country, the politicians have enough dollars to share and these people are those who have no legitimate means of earning this dollar,” he said.
Obi lamented that the country’s politics has remained largely transactional.
Nigeria’s two major political parties, the ruling All Progressives Congress (APC) and the main opposition,  the PDP, plan to hold primary elections to decide legislative, governorship and presidential candidates from the weekend to early June.
The country would elect a new national leader in February 2023, to replace Muhammadu Buhari, who ends his second four-year tenure in May.
Spokespersons for the two parties didn’t immediately respond to calls requesting comment.  
Politicians in Nigeria have a history of buying votes at party primaries going as far back as the 1993 elections, Director of Abuja-based Centre for Democracy and Development, Idayat Hassan said.
He added: “I think we’re just seeing the beginning of rise of the dollar because as we move closer to the primaries and the parties are trying to put their houses in order, the value of the dollar will also trade up.”
The Central Bank of Nigeria (CBN) could be forced to devalue the naira if it continues to weaken in the parallel market. The banking sector regulator has done so three times since March 2020, in a bid to curb demand and close the gap between the official and unauthorised rate.
The central bank should improve supply of the greenback rather than suppress demand, the President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, said by phone.
There is a “lack of confidence in the local currency,” Gwadabe said.