Naira is crashing due to panic buying of dollars – ABCON

A lot of things have stayed inconsistent when it comes to the Nigerian economy. However, the fall of the naira has stayed consistent right from when it became a dollar to a naira. The naira has come from a place of supremacy in comparison with the dollar and it has been disturbing watching this currency fall from what it was to what it is, typical story of grass to grace.

One would think that the alarming rate at which the naira has been falling would be grounds enough for change of some sort to be effected.

However, it is sad to see that the downward throttle of the naira does not affect the necessary quarters that have the ability to effect a change. While the vast majority of Nigerians are mourning the fall of their currency, several others have made a living out of it.

Hardship and high cost of living citizens has become the new oil well of certain stakeholders in the country.

This past week, we witnessed a massive recline with the naira dropping to a black market rate of about N710 to a dollar. Due to this spike, many Nigerians have taken the cue to panic buy dollars in order to preserve it for a while. There is a widely accepted narrative that suggests that the naira will keep experiencing a massive decline as the months roll by.

However, it seems as though this panic buying is causing more harm and doing no good, at least not to the economy.

The Association of Bureaux De Change Operators of Nigeria (ABCON) has stated that panic buying is causing the crash of the Naira. This was disclosed by the President of ABCON, Alhaji Aminu Gwadabe to the News Agency of Nigeria (NAN).

Naira has been under immense pressure in the past two weeks, falling from an average of N618 to a dollar recorded two weeks ago. Lack of FX and a surge in demand were responsible for the Naira’s massive depreciation, said the Bureau de Change operators.

 “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, the chairman of the Association of Bureau De Change Operators of Nigeria 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.