Exposed! How Cash Cartels are Conspiring to Kill the Naira

A lethal gang of unscrupulous expatriates; some Deposit Money Banks (DMBs;  and Bureau de Changes (BDCs) have all conspired to ensure that the Central Bank of Nigeria (CBN) fails to salvage the dwindling value of the naira.

The expatriates, (mainly from Asia and Far East) in the gang otherwise referred to as cash cartel or Naira cartel; buy up the US dollar allocated to BDCs weekly for subsequent sale to end users at the end of CBN’s foreign exchange market, the Retail Dutch Auction System (RDAS) on Wednesdays.

Daily Sun captured it more concisely when it said that the practice has been going on since the reintroduction of RDAS as the banking halls of most DMBs in urban areas, especially Lagos and Abuja, have unfortunately been turned into the market place of this illegal brisk business.

It was observed that as early as 2pm every Wednesday, these scavengers would literally take over the banking halls of DMBS, awaiting the end of RDAS when CBN is expected to credit the accounts of their BDCs partners.

Once the accounts of these BDCs in DMBs are credited, the expatriates who are already armed with wads of crisp naira notes exchange the national currency inside the banking halls at a wide margin and the deal is automatically consummated within minutes.

Daily Sun also learnt that the increasing attack on the naira was further worsened as the end users, waiting to buy from BDC’s offices would have little or none for their genuine economic transactions.

According to informed sources, the activities of these economic saboteurs, which are detrimental to the nation’s economy explains why some forex users often desperately pay higher to get the needed hard currency.

A BDC operator who spoke on condition of anonymity said the expatriates merely buy off the dollar for ease of repatriation, as if the purpose was to deplete Nigeria’s foreign earnings.

Despite the apex bank’s deployment of monetary policy measures to reduce the pressure on the naira and stem creeping core inflation, the nation’s currency has continued to lose value against the US dollar.

However, despite CBN’s intervention at last week’s RDAs window when it offered a total of $400 million and sold $394.6 million to 20 DMBs at N155.74/$, the naira still exchanged N164.90/$ at the inter-bank.

The development was seen by market observers as disturbing as the naira has dropped 2.8 per cent against the dollar on the inter-bank since 2013 despite the Monetary Policy Committee’s (MPCs) decision to retain the Monetary Policy Rate (MPR) at 12 per cent, Cash Reserve Ratio (CRR) on public sector funds at 75 per cent while raising CRR on private sector deposits to 15 per cent.

Analysts insist that the tightening position has not substantially impacted on the nation’s foreign reserves, which currently stands at less than  $38 billion and only capable of taking care of about nine months of import.