Nigerian central bank warns against using FX black market

By Alexis Akwagyiram
LAGOS, May 21 (Reuters) - Nigeria's central bank governor is
warning against the use of black markets for foreign currency
exchange after a coronavirus-induced oil price crash caused
dollar shortages for Africa's biggest economy, in a video seen
by Reuters.
Governor Godwin Emefiele warned domestic and foreign
investors against patronising the unofficial market, saying it
was helping to overheat that market.
The central bank was not immediately available for comment
on the video.
The naira has hit a series of lows on the black market
widening the gap with the official and over-the-counter spot
markets, especially after dollar sales were suspended due to a
coronavirus lockdown in April and a 15% devaluation in March.
Dollar sales have since resumed following a phased easing of
the lockdown but foreign investor currency demand is yet to be
met, analysts say.
"Don't go there it is not good for you," Emefiele told
investors on the call referring to the black market. The date on
the computer screen is May 18 2020.
"You would lose money because you would have bought at a
price that is not realistic," he said.
Dollar demand has been swelling and piling up pressure on
the naira. Importers with past due obligations have scrambled
for hard currency while providers of foreign exchange, such as
offshore investors, have exited.
The oil price crash has exacerbated a shortage of dollars
for Nigeria, whose reserve has declined 21% to $35.5 billion
over the last year.
In May, the bank weakened the naira on the derivative
futures market, signalling more pain to come for the
currency. Emefiele in the video urged investors to be patient, saying
that dollar demand would be met in an orderly manner.
Analysts estimate there is pent up demand between $1.5
billion and $1.8 billion from investors looking to exit Nigeria,
whose economy is forecast to shrink by 3.4% this
year. (Writing by Chijioke Ohuocha
Editing by Alexandra Hudson)