The Nigeria National Petroleum Company (NNPC) Limited has been blamed by the Central Bank of Nigeria (CBN) for scarcity of dollar and depreciation of the naira in recent weeks.
Nigeria’s financial regulator made the statement on Friday after the exchange rate of the dollar crossed the N700 mark in the black market of the foreign exchange segment.
On Thursday, the naira fell to N718 per $1, as the Bureau De Change operators increased their asking price in the black market for the sale of the United States currency, from N707 it traded for on Wednesday.
The increment was driven by the high demand of dollar, which has piled up pressure on naira in the black market, as the central bank refuses to sell foreign currencies to them over alleged financial infractions.
CBN governor, Godwin Emefiele, accused The BDC operators of operating against their mandate and aiding money laundering by providing their services to illegal businesses. Since the ban on sales of forex to Bureau De Change, naira has been on a free fall in the parallel market.
CBN blames NNPC, others for naira fall
In a recent reaction addressing the depreciation in naira, CBN said NNPC and its subsidiaries have not been remitting dollars to Nigeria’s foreign reserves, and this has caused shortage of forex.
In a statement titled, “The forex question in Nigeria: Fact sheet” the CBN revealed that the NNPC remittance from crude oil accounts for over 80 percent of Nigeria’s Foreign Exchange (forex) earnings.
The apex bank said the CBN can’t solely manage the naira with its monetary policies, and it doesn’t print foreign currencies, so the non-remittance by the NNPC and its subsidiaries significantly limit the availability of forex in the foreign reserves.
“Domestically, there has been zero dollar remittance to the country’s foreign reserve by the NNPC.” CBN said.
“As noted by the CBN Governor, Godwin Emefiele, monetary policy alone cannot bear all the burden of the expected adjustments needed to manage these difficulties. It’s our collective duty as Nigerians to shore up the value of the naira.”
Aside from faulting the oil Corporation, the CBN also blamed the two recessions driven by global economy slowdown and COVID-19 pandemic in the last six years.
These factors have affected Nigeria’s sources of foreign currencies; oil exports, non-oil exports; diaspora remittances, as well as the Foreign Direct/Portfolio Investments inflow recorded by the country.
The statement further reads, “Considering Nigeria’s heavy dependence on oil exports for foreign exchange earnings and government revenue, the impact of the oil market crash severely affected the government’s naira revenue and other macroeconomic aggregates including economic growth. Hence, the rate of exchange between the naira and other currencies has widened over the past few years.”