BDC operators facing constraints buying forex from banks — ABCON
Bureau de Change (BDC) operators, under the umbrella of the Association of Bureau De Change Operators of Nigeria (ABCON), have expressed concerns about being unable to purchase foreign exchange from banks.
The operators attribute this challenge to the current situation where the exchange rate at the parallel market is trading lower than the interbank sales to the BDCs.
This disclosure was made during a conversation with the ABCON President, Aminu Gwadebe, on Wednesday, where he highlighted that the naira has experienced some stability and gains in the foreign exchange market.
Gwadebe pointed out that licensed currency traders are not witnessing a convergence of rates between the official and parallel markets.
He said: “Currently, the naira has maintained its stability and appreciation in the foreign exchange market, and we have witnessed the ultimate objective of the convergence of the official market and the open market, also known as the free funds/parallel markets.”
However, he noted a significant discrepancy: “What we are witnessing now is a situation where the parallel market rate is even trading lower than the interbank proceeds sales to BDCs. For instance, yesterday, while the banks were offering a weighted average of N1505/$, the parallel market rate was at N1503/$, which makes it difficult for BDCs to purchase from the banks.”
Gwadebe called on the Central Bank of Nigeria (CBN) to introduce a prudential percentage on the volumes of sales from diaspora remittances and portfolio investment proceeds by the banks to BDC operators.
This, he said, would help to sustain forex supply and curb illegal economic activities such as currency substitution, speculation, and frivolous discretionary demands.
He added: “It is, however, not yet ‘Uhuru’ without continued regulatory oversight on the transparency of participants, especially regarding the maximum margin on sales by the banks to the BDCs.”
Gwadebe also urged the CBN to issue a prudential percentage on the volumes of sales from diaspora remittances and portfolio investment proceeds by the banks to BDCs to ensure a steady supply of forex and discourage illegal activities.
He further stressed that the CBN should not neglect the calibration of its intervention sales to the BDCs, describing them as a catalytic actor in the foreign exchange market that plays a crucial role in supporting the naira’s strength.
In addition, Gwadebe commended fiscal authorities for their efforts to reduce the fiscal deficit, which he described as an obstacle to effective exchange rate determination.
He also called on the authorities to sustain the downward trend in inflation, urging the government and state agencies to declare a state of emergency on inflation in order to alleviate the hardship faced by many Nigerians.
