…As Naira firms in black market trading
By Isaac Anumihe
Following complaints from business executives over the difficulties they encounter with embassy officials, the Federal Government yesterday launched an online system to enable investors apply for visa online and collect it on arrival 48 hours later.
Under the new system, travellers must register with the Nigeria Immigration Service (NIS) and provide details including travel document information, after which a letter of approval may be issued and the visa collected on arrival.
According to the Comptroller General of the Nigerian Immigration Service (NIS), Mohammed Babandede, the move was in line with the government’s “policy on creation of a conducive environment to attract foreign high networth investors and professionals into the economy.
Overseas investors have mainly stayed away from Africa’s largest economy after being put off by a gap of around 30 per cent between the official rate of the naira currency, controlled by the central bank, and rates on the parallel market.
Nigeria, a member of Organisation of Petroleum Exporting Countries (OPEC) member, is in recession for the first time in 25 years largely due to low oil prices.
Meanwhile, the gap between what traders bid and offer for naira on the black market has widened following a series of central bank interventions on the official market.
Traders are trying to hedge against losses after the currency firmed sharply during previous session.
Recall that the central bank has been intervening in the official market in recent weeks to narrow the official currency spread with the black market rate. It offered to sell $100 million in currency forwards yesterday.
Bid-offer spread widened as much as N15 on the black market yesterday after the currency gained 4.9 per cent on Wednesday to a seven-month high. It firmed to as much as N385 on the black market. Others quoted N406 to the dollar.
On the official market, the naira was quoted at N308 per dollar yesterday and traded with a spread of N0.50.
“Everyone is hedging his bets. We bought the dollar as high as N500 and we don’t know where the rate is going,” Salisu, a black market trader, said. He expected the naira to firm further.
Central Bank Governor, Mr Godwin Emefiele on Tuesday said that speculators betting on a naira fall “are taking a risk and will lose”. He added that he expects the black market rates to narrow further.
Bid-offer spread on the black market was N5 before those comments. The bank has also been weakening the naira on the official market to converge rates, traders say, adding that the weakness was not a devaluation and it has not provided a target rate.
Head of Nigeria exchange bureaus, Aminu Gwadabe, said that he expected the naira to stabilise around N380-N400 to the dollar, but added that the central bank must review the multiplicity of rates.
The West African nation has at least five exchange rates – the official one, a rate for Muslim pilgrims going to Saudi Arabia, the one for school fees abroad and a retail rate set by licensed exchange bureaus at N399.