5 people benefiting from the fall of Naira

The Naira has plunged more than 70% in the black market as against the parallel market.

Parallel market traders as at yesterday was selling at N400 – USD1.

The widening premium between the parallel market rates and the official rates have worsened the currency situation.

The slump comes amid concerns about the Naria’s devaluation and the global slump in crude oil prices.

Following the unprecedented free-fall of the Naira in value against the US Dollar, the currency has plunged more than 70% in the black market when compared to the parallel market since the Central Bank adopted its “managed float” exchange rate system.

According to Nairametrics, here’s a list of people who stand to gain from the weak Naira:

1. Nigerians in Diaspora: This is perhaps the best time to live and work outside Nigeria especially if your income is in dollars. Sensing blood, many of them exchange their dollars in little tranches believing that today’s rate will always be cheaper than tomorrow. Some believe this is the best opportunity to buy land and houses as the value of the dollar has now risen by about 70% against the Naira while property prices have been somewhat depressed.

2. Commercial banks: Banks have been under pressure since the price of oil began its devastating fall in July 2014. With huge exposures to the oil and gas sector they have seen their loans increasingly become risky with borrowers missing out on their obligations. However, they have also posted massive gains from forex as can be seen in their income statements at the end of financial year 2014 and the first 9 months of 2015.

3. Bureaux de Change (BDC) Operators: They perhaps the biggest benefactors of Nigeria’s forex woes. The CBN in January banned sale of forex to BDC operators accusing them of buying forex from the CBN at N199 and then selling at the black market. The CBN also noted that the BDC’s buy dollars from the CBN at N197 only to sell to their customers at N250. According to the CBN, BDC has risen from a mere 74 in 2005 to 2,786 BDCs today.

4. Exporters: Businesses engaged in exports are also huge benefactors of the declining exchange rate. Revenues from their exports officially should route through the CBN as export proceeds however it is understood that some of them move a chunk of that to the black market. With gains as high as 50% most of them find it hard to resist the lure of selling their hoard at the black markets rather than at the official window.

5. Friends and associates of the Central Bank of Nigeria (CBN): Reports suggests that people close to the management of the CBN or indeed the government are also befitting from the fall of the Naira. They get preferential treatment from the CBN by buying at official rates rather than at the black market rates where a lot of Nigerians go to.