2016 Hajj: CBN To Sell Dollars To Pilgrims At 197

The Central Bank of Nigeria has issued
a circular instructing commercial
banks to sell dollars to Pilgrims going
to the Hajj at an exchange rate of
N197.
The Central Bank explains that the sale of the forex will be funneled through
commercial banks who are then
mandated to sell to pilgrims at N197.
Pilgrims are expected to purchase a
minimum of $750 and a maximum of $
1000 per pilgrim. he circular also reveals there are a total
of 65,197 Pilgrims, thus the CBN will
sell as much as $65,197,000 assuming
every Pilgrim buys as much as $1000
each.
Nigeria’s official exchange rate closed at about N315 which suggest that this
sale could cost Nigerian tax payers
about N7, 693, 246,000 in exchange
rate loss (based on 315 -197=118).
This is not the first time the Central
Bank is selling dollars to Pilgrims at a subsidized rate. Last August it also
sold dollars at N160 at a time when
the official exchange rate was about
N197. Only that this time, the disparity
is wider.
The implication for Nigerian tax payers is that the government is now
incurring this sort of expense at a time
when the economy is likely in a
recession and millions are finding it
hard to feed themselves. It is also at a
time where the Nigerian government is running cap in hand begging
foreign investors to invest in Nigeria
so that we can boost our external
reserves.
It also calls to question suspicions that
government officials may be getting travel allowances at a different
exchange rate from what is obtainable
at the official interbank market.
The Central Bank of Nigeria floated the
Naira on the 20th of June 2016
following a year-long policy of holding the exchange rate at a fixed
rate of about N197/$1. Since floating
the naira, the exchange rate has
depreciated by as much 60% at the
interbank and over 100% at the
parallel market. The dollar closed at about N400 at the parallel market on
Thursday.