The Association of Bureau De Change Operators of Nigeria (ABCON) has made a fervent appeal to the Central Bank of Nigeria (CBN) to consider adjusting and lowering the applicable exchange rate for Bureau De Change (BDC) operators.
The request comes as the current exchange rate of N1,251/$, set by the CBN, is deemed unsustainable by the BDCs in light of recent market developments.
In a letter addressed to the Director of the Trade and Exchange Department and signed by ABCON President Aminu Gwadabe, the association highlighted concerns regarding the disparity between the official exchange rate and the prevailing parallel market rate, which has dipped below the CBN’s pegged rate for the first time in 15 years.
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ABCON noted that the rapid appreciation of the naira, coupled with the discrepancy between official and parallel market rates, has rendered the CBN’s selling rate to BDCs prohibitively expensive. This has led to difficulties in offloading foreign exchange to retail end buyers, who are increasingly seeking cheaper rates from undocumented forex operators.
Furthermore, ABCON expressed dismay over delays in the allocation of dollar funds to BDCs, citing heightened scrutiny of documentation at designated collection centers. This has exposed BDCs to exchange rate risks and potential losses, especially as the naira continues to appreciate against the dollar.
The association pointed out the urgent need for a downward review of the applicable exchange rate to align with current market realities. ABCON asserted that failure to adjust the exchange rate could result in significant income and capital losses for BDCs, undermining their viability and impeding efforts to enhance naira sovereignty.
“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5% are yet to receive their disbursement,” the statement reads. “This is happening in the face of the prevailing open market rate of N1,235/$ which is lower than the authorized applicable exchange rate by the CBN to the BDCs.”
While commending the CBN’s efforts to strengthen the naira and restore exchange rate stability, ABCON urged for prompt action to address the exchange rate disparity. The association also called for improvements in the payment and bidding process, emphasizing the need for automation to facilitate timely transactions and enhance transparency.
ABCON has additionally urged the apex bank to implement a designated cut-off time for payments and bid collection. They argue that the current open-ended system lacks effective administration and control of the process.
“Consequently, many of our members are jittery to bid/collect their bid for fear of losing money as the current market reality has the potential to force us to sell below cost price and antithetical to recent market price discovery,’’ it said.
The association emphasized the importance of a swift and decisive response from the CBN to restore confidence among BDC operators and ensure their effective participation in the foreign exchange market.
“It is in view of the above market developments that we write to appeal to your good selves for a readjustment and review downwards of our funding rate of the last tranche (2nd bidding) from N1,251/$ further down to reflect the current market rate discovery,” the statement noted further. “This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions.”