The story of the struggle between the CBN and the abokiFX exchange rate platform

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abokiFX, a popular and web-based mobile Platform which collects black market exchange rates in Nigeria on Friday announcement it will temporarily suspend the publication of rates on all its platforms, hours after receiving threats from the Central Bank of Nigeria (CBN).

The umbrella bank had announced that it would shut down the platform, which Governor Godwin Emefiele called “illegal and criminal” and accused of carrying out “illegal activity that undermines the economy”.

After the two-day Monetary Policy Committee meeting in Abuja, Emefiele confirmed that the umbrella bank also plans to prosecute the alleged owner of abokiFX, Olusegun Adedotun Oniwinde, for “illegal currency exchange” and “economic sabotage”.

“I have given instructions to our experts to go after his website and make it clear that we are going to prosecute him because we cannot allow this to continue,” Emefiele said, adding that the CBN does not recognize any window on the foreign exchange market. outside the Investors and Exporters (I&E) window.

Why Nigeria Has Different Exchange Rates

Nigeria is Africa’s largest producer of oil, a commodity that brings in over 90% of the country’s foreign exchange earnings. Between 2014 and 2016, the fall in global oil prices caused a tightening of the dollar which led to an economic recession.

But rather than an outright devaluation of the naira, the CBN has adopted a multiple exchange rate regime. This involved maintaining a higher rate indexed to the US dollar for official transactions and a lower floating rate for investors and exporters, known as the NAFEX window.

Other rates have been introduced for travelers and small and medium enterprises (SMEs) while there is also the parallel or black market, where foreign currencies are traded informally and the naira is often valued below the level. NAFEX rate.

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A historic drop in oil prices triggered by the Covid-19 pandemic last year has caused a more severe shortage of hard currency in Nigeria. The CBN was forced to devalue the naira twice last year, among other measures intended to stabilize the exchange rate, such as limiting over-the-counter deposits and withdrawals of foreign currency and banning the sale. currency at exchange offices.

In March, the umbrella bank also replaced the official counter exchange rate of 379 / $ 1 with the NAFEX rate of 410.25 / $ 1, as part of efforts to abandon the exchange rate system. multiples which would distort the market and frustrate foreign investors, in favor of a single rate system. This left Nigeria with just two rates – the NAFEX rate and the parallel market rate – out of nearly five different rates at the start of 2020.

Where abokiFX comes into play

Prior to abokiFX, Nigerians wishing to exchange currencies on the unofficial black / parallel market could only obtain rate information manually, for example through phone calls to exchange offices.

However, the platform, which was launched in 2014, has grown in popularity as a go-to source of information on the value of the naira against major foreign currencies on the black market. It is used by market operators for commerce and news organizations for reporting.

In recent weeks, and particularly after the CBN halted sales of foreign exchange to Bureau De Change (BDC) operators a month ago, the value of the naira has fallen sharply as the gap widens further between parallel rates. and NAFEX.

Before the ban, the local unit was trading around $ 520/1 but fell to $ 570/1 on Friday. The day before, the naira had recorded its biggest one-day drop in the parallel market in several months, falling 8.00 or 1.42% from $ 562/2 on Wednesday to $ 570/1 per data abokiFX .

Meanwhile, data on the FMDQ securities exchange window, where the forex is officially traded, showed the naira closed at 412.88 / $ 1 on Friday. Currency speculators take advantage of this difference between the black market and official rates through round trip and other forms of currency manipulation practices that negatively affect the value of the local currency.

Allegations of economic sabotage

According to CBN Governor Oniwinde, who is based in the UK, publishes arbitrary rates without contacting BDCs and uses his website for forex manipulation and speculation, taking advantage of the large disparity between quoted rates on abokiFX and the official exchange rate.

Emefiele added that apex bank has been studying the platform’s activities for the past two years. “There was a time when we asked our colleagues to call the abokiFX to ask how it handled the rates.”

“Section 2 of the CBN Act makes it clear that only the central bank can determine the value of the naira, and yet a single individual living in England continues to manipulate the exchange rate and make a huge profit which he withdraws through an ATM. automatic in London.

A screenshot from the abokiFX website.

“This is economic sabotage and we will pursue it wherever it is, we will report it to international security agencies, we will hunt it down, Mr Oniwinde, we will find you, because we cannot allow you to continue to lead illegal activity, which is killing our economy, ”Emefiele said.

The CBN official also alleged that Oniwinde was an illegal currency dealer with more than 20 bank accounts in eight banks teeming with money from speculative activity and he sold “tens of millions of currencies” to several Nigerian companies, violating the country’s foreign exchange laws.

abokiFX Debunks Claims

abokiFX in a statement released Friday refuted CBN’s claims and said not all allegations against its director were confirmed.

“All allegations against our director have yet to be confirmed, but at abokiFX we do NOT trade currencies or manipulate parallel market rates,” the statement said. “Apart from the media allegation, we have not received any communication from any government agency and our accounts are not closed as stated in the media.”

The company has, however, temporarily suspended rate updates on all of its platforms to “get more clarity on the situation”, adding that it “sincerely hopes the suspension will lead to the appreciation of the Naira from next week. “.

“The final tariffs were released tonight, but the news section of abokiFX and the crypto tariffs section will still be active,” the statement added. “With our decision to temporarily suspend online pricing publication, we recognize that there will be limited visibility of parallel pricing information, which will impact decision making for many. “

The abokiFX statement. Image credit: TechCabal

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