FX: CBN Governor thinks the parallel market isn’t all that, but here’s why Nigerians disagree

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, in an address during a virtual monetary policy meeting in Abuja on Tuesday, dismissed the parallel market as supplying a paltry 5% of the foreign exchange demand in Nigeria.

The claim follows complaints by the governor on how economic analysts use the parallel market exchange rate to claim the Naira exchange rate is N470 to a dollar.

By virtue of sheer volume, the governor may not be wrong about the market share held by the parallel market. CBN was responsible for 25.7 billion dollars worth of foreign exchange transactions as far back as 2018. But as the response to the governor’s remarks show, Nigerians on ground feel the impact of the parallel market they have better access to, more than that of the apex bank.

Twitter user @ambrosia_ijebu theorised that it is unlikely the claim by the  governor is true, because in his words, “If it was true that “only 5%” of FX demand in Nigeria is supplied at the parallel market rate, do you know how easy it would be for CBN to crash that price from 480 to whatever it wanted?”

@ambrosia_ijebu is not the only Nigerian who disagreed with Governor Emefiele. Twitter user, @suwamatic noted that while the governor complaints about the rampant corruption he claims is prevalent in the parallel market, the very banks he regulates charge customers at the same parallel market rate he is kicking against.

The important question this raises is, beyond throwing a fist, what is the CBN governor doing about FX rate regulation? Nigerians are willing to go through the proper channels for the foreign exchange needs, but is the apex bank able to deliver?

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