By Olaleye Aanuoluwapo, Abuja
Naira on Wednesday traded at N522 against the Dollar at parallel market, a day the Central Bank of Nigeria (CBN) suspend sale of foreign exchange to Burea De Change (BDC) operators.
Nigerian NewsDirect gathered that Dollar opened the week at N503 against the Dollar.
The traders explained that the move by CBN would likely put more pressure on the banking sector and would make things more difficult for customers who needed to trade using foreign currencies.
A renowned BDC operator, Mr. Ikechukwu lamented that the decision of the Monetary Policy Committee of the CBN is quite harsh and unfair.
According to him, “The MPC decision was in a bid to curb incessant irregularities that has become the other of the day in foreign exchange trading, as some traders and directors buy at normal rate and instead of selling at the normal rate as well they hoard the convertibility and use it for other dubios purposes.”
Ikechukwu, however pointed that there are better ways to address the issue rather than placing a ban on the selling of foreign exchange to BDC operators.
He further explained that there would be lesser Dollar in circulation in the alternate market in few weeks time and this might make the price of Dollar to surge to reach N550/$.
In another interaction with another BDC operator, Alhaji Abdulahi, complained that the ban would make foreign exchange trading more difficult for Nigerians.
Abdulahi admitted that even though a customer approaches the bank with an approved form M, the customer will still experience difficulties if he/she doesn’t have dollars in his/her domiciliary account.
A financial expert, Mr Okechukwu Unegbu in an interview urged the Central Bank of Nigeria (CBN) to be cautious of its recent “blanket’’ ban placed on Bureau de Change (BDC) operators from foreign exchange (forex) trading.
Unegbu who was the past President of the Chattered Institute of Bankers of Nigeria (CIBN), said that the ban would create some challenges in the market as commercial banks might not be able to meet the forex demands of importers.
According to Unegbu, commercial banks themselves are not perfect, as some of them also flout forex regulations.
“This punitive measure by the CBN can negatively affect the forex trading market.
“Most businessmen, when they cannot access forex from commercial banks, rush to the BDCs.
“Banks are not perfect, they also bend the rule sometimes, but that of the BDCs became so obvious due to their large numbers.
“The Naira has been so bastardised and it is good to see that the CBN is acting to remedy the situation,’’ he said.
Unegbu said that although some of the BDCs were involved in unwholesome practice there were still some BDCs that operated above board.
He said that the move by the apex bank was only a step toward resolving the abuse in the forex market and to reduce pressure on the Naira.
“There had been a lot of misgivings about forex in the country but this blanket ban by the CBN is just a step towards the solution.
“Not all the BDCs are bad, but as it is now CBN has banned both the good and he bad.
“But it is a warning to the Association of Bureaux De Change Operators of Nigeria (ABCON).
“ABCON should find a way to make amends and reign in on some of the operators that abuse the system,’’ he said.
The CBN announced immediate discontinuation of forex to the BDCs.
CBN Governor, Mr Godwin Emefiele, who made the announcement during the banks 280th Monetary Policy Committee (MPC) meeting, said that the BDC operators were involved in rent-seeking behaviour money laundering activities.
Emefiele added that BDCs were to serve the retail end users who needed 5,000 dollars or less, but had defeated their purpose of existence to provide forex to retail user.
He also said that BDCs had instead become wholesale and illegal dealers.