Some people and corporate entities are saving their fortunes in dollars as a preferred store of value, in the face of the continued plummet of the naira, Daily Trust investigations revealed
Some of those who spoke to our correspondents said it was safer, convenient and profitable to keep money in dollars because of the dwindling fortunes of the naira, especially in the parallel forex market.
Analysts believed that the rush for the dollar and other factors have further exacerbated the pressure on the naira as checks at the bureau de change (BDC) market in Wuse, Abuja and other places showed that the value of the Nigerian currency was fast plummeting.
The United States dollar was yesterday purchased by walk-in customers between N565 to N567 to $1. Similarly, checks in Kano, Kaduna and Lagos showed that the prices fluctuated between N564 and N570/1$.
The BDCs also confirmed huge demand for forex at the moment with some of the operators disclosing that most of the demands were from SMEs that were having difficulty accessing forex from banks.
One BDC operator, Malam Nura, said the demand was high especially from small business owners, saying that the naira might be losing its value partly because of the demand.
He, however, could not confirm if individuals were closed betting their naira accounts to dollars to hedge against inflation and devaluation. Nura said that small businesses might have been buying enough to save so that they could continue to import in case the naira value falls further.
“If importers don’t have dollars, and if the naira keeps falling, they may not be able to import and their businesses may be affected. I think this is why they are buying and holding it so that they can have enough for import for a long period,” he said.
According to Ahmed Nasiru, an Abuja-based businessman, “I operate one of these savings accounts that you are not expected to withdraw from after some time. Mine is 5 years 2020-2025.
“But looking at the way things are going in Nigeria, especially how the naira is seriously losing value with nothing concrete being done about it, I am seriously thinking of saving money in a more meaningful foreign currency like the dollar.
“Prices of basic items would keep skyrocketing. There is serious inflation and no meaningful interest paid on our savings; we are also not sure of what will become of this country.
“The fact is that what N1, 000 would buy for you in September 2021, it will not buy the same thing for you in December 2021,” he said.
Govt officials, elites in rush for dollars
A senior management staff of a first-generation bank told Daily Trust that many government officials in ministries and agencies, captains of industry, among others spend dollars in Nigeria unhindered.
“Nigeria as a country has not officially discarded the naira,” he said. Kenneth John, a property developer said some rich people these days go for the dollar instead of investing in property.
“The dollar gives them serious profit without any labour. Some people keep billions of naira in dollars at home and the value keeps appreciating by the day.
“To them, the naira is nothing, it is as good as nothing so they don’t want to be associated with it and this is very dangerous for a sovereign country like Nigeria,” he said.
Schools, hotels, consultants charging in dollars
Hannatu Salihu who works in one of the government agencies said they pay the school fees of their children in dollars.
“Some of the high profile schools don’t want naira. It is worthless to them and therefore, they prefer to be paid in dollars,” she said.
Yusuf Mohammed, a trader at Wuse Market in Abuja, said the demand for foreign goods was aggravating the troubles of the naira.
“We are now a consumption country; Nigerians import almost everything from abroad. They buy lipstick, toothpick, toothpaste, bulbs, soap and utensils from abroad. We import juice, clothes, shoes and any other thing that we can simply produce here. The pressure on the dollar is very high and that is why we are where we are.
“The naira will continue to suffer and Nigerians would continue to pay more money to get basic things unless we have a deliberate policy to reverse the trend. The only way to reverse the trend is to shelve our penchant for foreign goods.
“What is happening now is that people from Niger, Chad and Benin sneak into Nigeria with few dollars and go back with many things,” he said. In Economic parlance, dollarisation of the economy occurs when people in a country use foreign currency in parallel to or instead of the domestic currency as a store of value, unit of account, and/or medium of exchange within the domestic economy.
A financial Analyst, Julius Alagbe, said corporate entities were not exempted from this chase.
He said, “What they are doing is a matching order; fund managers and investment banks are investing in currency of the same denomination to ensure that even if it does not yield a kobo, they will not lose because they know that the investment will return in the dollar.
“It is called forex trading. That is what many banks are using to push up their income statement because they translate their results in naira.
Source: Daily Trust