Bureau De Change (BDC)
operators in Nigeria have raised concerns over the Central Bank of Nigeria’s
(CBN) inconsistent dollar allocations, which they believe are impeding the
recovery of the naira. The operators pointed out that the lack of regular and
predictable dollar supply from the CBN is causing a loss of confidence in the
foreign exchange (forex) market, leading to increased pressure on the parallel
market.
To alleviate the forex
scarcity, the CBN had approved the sale of $20,000 to BDC operators at a rate
of N1450 per dollar on July 18, 2024. This measure was intended to strengthen
the naira, particularly in the retail segment of the market. However, despite
this intervention, the exchange rate remains high and volatile, with the dollar
trading at N1590 in the parallel market.
Aminu Gwadebe, President of the
Association of Bureau De Change Operators of Nigeria (ABCON), noted that the
inconsistency in the CBN’s dollar supply has contributed to ongoing volatility
in the forex market. He emphasized that the lack of frequent interventions has
increased demand pressure and further weakened the naira.
“The problem is the streamlining, only once, is it on the 18th of July or so? Like you said, about three weeks, till now, no sales again,” Gwadebe remarked, highlighting the sporadic nature of the CBN’s interventions.
Gwadebe called for the CBN to
engage in more frequent dollar sales to currency traders. He suggested that
sales could occur once or twice a week to ensure a more stable and predictable
flow of dollars into the market. According to him, regularity and volume,
coupled with a clear cut-off time, would encourage market participants to
engage more confidently, thereby improving liquidity and stabilizing the
exchange rate.
“But if I know the window is
open for one month for me to buy and with no cut-off time, and then I am not
sure when it will come again, people will not be encouraged to come into the
market,” he explained, stressing the need for consistency in the CBN’s forex
interventions.
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