The Association of Bureau De Change Operators of Nigeria (ABCON) has appealed to the Central Bank of Nigeria (CBN) to adjust and lower its applicable exchange rate downward below the N1,251/$ it pegged for the Bureau De Change (BDC) operators.
This request comes amidst a historic development where, for the first time in 15 years, the parallel market rate of N1,235/$ is lower than the official rate of N1252/$.
ABCONAppeal for Exchange Rate Adjustment
In a letter addressed to the Director of the Trade and Exchange Department and signed by ABCON President, Aminu Gwadabe, the association expressed concerns over the affordability of the current exchange rate. The rapid appreciation of the naira, which outpaced expectations, has made the CBN’s selling rate to BDCs prohibitively expensive, rendering it challenging for BDCs to attract retail end buyers who seek cheaper rates from undocumented forex operators.
ABCON emphasized the plight of many BDCs who funded their accounts for dollar allocations but are yet to receive their allocations due to delays in document scrutinization at designated centers. This delay exposes BDCs to exchange rate risk and potential losses, especially as the prevailing open market rate of N1,235/$ is lower than the authorized applicable exchange rate by the CBN to the BDCs.
The association highlighted the adverse impact on BDCs who purchased dollars at the CBN’s rate of N1,251/$ but are now compelled to sell at the lower open market rate, resulting in income and capital losses. Therefore, ABCON called for a downward review of the applicable exchange rate to enable BDCs to remain competitive and mitigate losses.
Despite the challenges, ABCON commended the CBN’s efforts to strengthen the naira and restore stability in the forex market. The association expressed optimism regarding the market’s willingness to correct itself, predicting further appreciation of the naira across all markets aided by CBN policies.
In addition to the exchange rate adjustment, ABCON requested several other measures to streamline the forex bidding process and enhance operational efficiency. These requests included the automation of payments at disbursement centers, approval of refunds for BDCs awaiting disbursement, introduction of a cut-off time for bid payments and collection, and a review of the bid collection process to ensure effective administration and control.
ABCON reiterated the urgency for a swift response from the CBN to address the exchange rate disparity and bolster BDC operators’ confidence in the intervention measures. A decisive action from the apex bank is crucial to ensuring a conducive operating environment for BDCs and facilitating their participation in the bidding process. As stakeholders await the CBN’s response, the outcome of this appeal will significantly impact the dynamics of the forex market and the operations of BDCs in Nigeria.
