The Association of Bureaux De Change Operators of Nigeria (ABCON) has said that panic buying of dollars is causing the crash of the Naira. President of ABCON, Alhaji Aminu Gwadabe told the News Agency of Nigeria (NAN) in an interview. The parallel market exchange rate has already dropped to a staggering N720 to $1 due to the Naira’s sharp decline in recent months. Naira has been under immense pressure in the past two weeks, falling from an average of N618 to a dollar recorded two weeks ago. Bureau De Change operators said that lack of foreign exchange and a surge in demand were responsible for the Naira’s massive depreciation.
The ABCON boss said the fall of the Naira is fueled majorly by the innate desire for self-preservation of some people and corporates who substitute a weaker currency for a stronger one. He said that the paradigm has evolved to the current crescendo of panic buying of forex, most of which will end up under pillows and offshore. He said that this phenomenon can’t be adjudicated by the authorities. He said “It’s typical consumer behaviour; Nigerians are sitting on an estimated 100 billion-dollar chest outside the country’s mainstream banking system. Today’s panic buying causes the currency to drop in value thereby inducing tomorrow’s panic buying which in turn results in further decline of the value of the currency and so forth”.
Gwadabe explained, “Panic buying is driven more by psychology and less by economic fundamentals, so the solution has to be psychological too”. Gwadabe urged the CBN to abandon the official exchange rate and undertake a sustained injection of the dollar in the market to reverse the loss in the value of the Naira at the parallel market.