The Association of Bureaux De Change Operators of Nigeria (ABCON) has made an appeal to the Central Bank of Nigeria (CBN) to consider adjusting and reducing its applicable exchange rate, currently set at N1,251/$, for its members.
Aminu Gwadabe, the National President of ABCON, conveyed this appeal in a letter addressed to the Director of the CBN’s Trade & Exchange Department.
The appeal arises as the parallel market rate stands at 1,235/$, which is lower than the Bureaux De Change’s (BDCs) applicable buying exchange rate of 1,251/$ (plus a 1.5 per cent margin) established by the CBN in its recent interventions.
Gwadabe expressed concern over the rapid appreciation of the naira, which has resulted in the CBN’s selling rate to BDCs becoming prohibitively expensive and challenging to transfer to retail end buyers. This situation has led consumers to seek cheaper rates from unregistered forex operators.
Additionally, he highlighted the predicament faced by many BDCs awaiting their allocation of dollars to fulfil the legitimate critical demand of their clients. Delays in the scrutiny of BDCs’ documentation for collection at designated centres have left them vulnerable to exchange rate fluctuations and significant financial losses.
“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5 per cent are yet to receive their disbursement. This is happening in the face of the prevailing open market rate of N1,235/$, which is lower than the authorized applicable exchange rate by the CBN to the BDCs,” the letter said.
Despite these developments, ABCON commended the leadership of the CBN for recalling Bureaux De Change (BDCs) into the official foreign exchange (FX) window and for implementing measures to fortify the naira against the dollar and other global currencies.
The president of ABCON noted that the positive outcomes of the CBN’s initiatives to restore the naira’s strength have materialized sooner than anticipated. He reaffirmed ABCON’s dedication to collaborating with the apex bank to achieve the government’s objectives of exchange rate stability and economic expansion.
Furthermore, he highlighted ABCON’s projections in the ongoing market dynamics, indicating a readiness of the market to self-correct through realistic price discovery. The naira is anticipated to continue appreciating across the market, supported by the growing influx of foreign exchange inflows facilitated by CBN policies.
“It is in view of the above market developments that we write to appeal to your good selves for readjustments and review downwards of our funding rate of the last tranche (2nd bidding) from N1,251/$ further down to reflect 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,” he noted.
The association also requested that the process of payments at the various disbursement centres be reviewed in the immediate time to a medium time automation to achieve enhanced timely payments while also observing the spot nature of transactions.
According to the group, the apex bank should introduce a cut-off time for payments and collection of bids, adding that the current open-ended system for payments and collection of bids does not make for 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 elucidated.
ABCON insisted that the disturbing exchange rate disparity could be addressed by a quick and decisive response of the apex bank, which would go a long way in bolstering BDC operators’ confidence in the ongoing intervention by the Central Bank of Nigeria as well as enhance their participation in the bidding process.
