Hi givers,
https://www.arise.tv/nigerias-central-bank-bans-sale-of-forex-to-bdcs/
https://images.app.goo.gl/X2snKkdLHgzuWXku8
On the 27th of July, Arise News, a London-based world news channel transmitted "free to air" reported the news of CBN ban on sales of forex to BDC operators.
The goal was to regulate the Price of foreign currencies in the country. CBN Governor had earlier accused the BDC of manipulating price and taking advantage of Ordinary Nigerians in the course of forex transactions. But the whole move backfired and caused the naira to plummet (fall) even further.
The is reason based on the law of supply and demand. When demand is higher than supply the value of a thing increases, however when supply is higher than demand, the value decreases. Hence the ban led to scarcity of dollar which ultimately led to the increase in value of dollar over the naira.
According to Economist and former Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, what was happening in the foreign exchange market was a consequence of the CBN’s policy choice of a fixed exchange rate regime and administrative allocation of forex.
He said, “It is a policy regime that has created a huge enterprise around foreign exchange – round tripping, speculation, over invoicing, capital flight etc.
“The action of the apex bank amounts to tackling the symptoms rather than dealing with the causative factors, which is not a sustainable solution.
This rapid fall of naira as against the dollar can be likened to the way fundamental analysis example the NFP news affects the FOREX market.
