2016 Hajj: CBN To Sell Dollars To Pilgrims At 197

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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.

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