The Association of Bureau De Change Operators of Nigeria (ABCON) is urging the Central Bank of Nigeria (CBN) to decrease its exchange rate for Bureau De Change (BDC) operators, currently set at N1,251/$, as it has become costly.
This appeal follows a recent development where, for the first time in 15 years, the parallel market rate of N1,235/$ is lower than the official rate of N1,252/$, which is the buying exchange rate applicable to BDCs.
The ABCON President, Aminu Gwadabe, communicated the appeal in a letter addressed to the Director of the CBN’s Trade and Exchange Department.
The BDC association highlighted that the rapid recovery of the naira, exceeding expectations, has rendered the CBN’s selling rate to BDCs excessively expensive and challenging to distribute to retail end buyers seeking cheaper rates from undocumented forex operators.
ABCON emphasized that many BDCs, despite funding their accounts for dollar allocations, are still awaiting their dollar allocations to fulfill the legitimate critical demand of their clients. This delay is due to the meticulous scrutiny of the BDCs’ documents for collection at various designated centers, exposing them to exchange rate risks and significant losses.
The association stressed that with the naira’s appreciation across markets, many BDCs who purchased dollars at N1,251/$ will incur substantial income and capital losses if they sell at the current open market rate of N1,235/$. Therefore, it underlined the necessity for a further downward review of the applicable exchange rate for the period and ongoing efforts to strengthen naira sovereignty.
The statement partly reads;
“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5% are yet to receive their disbursement. 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.’’
“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. This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions.’’
“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.’’
