ABCON Seeks Regular Forex Supply to BDCs for Naira Stability
By Aduragbemi Omiyale
The president of the Association of Bureau de Change of Nigeria (ABCON), Mr Aminu Gwadabe, has charged the Central Bank of Nigeria (CBN) to enable the supply of foreign exchange (FX) to his members to strengthen the value of the Naira against the United States Dollar.
Speaking on the new guidelines issued for Bureaux de Change (BDC) operators recently by the apex bank, he said his group could not be pushed aside in the forex market because of the critical role it plays.
In an effort to reduce the premium between the official exchange rate and the two major others, like the black market and the peer-to-peer (P2P), the CBN adopted forex liberalisation.
However, the floating of the domestic currency to allow its value to be determined by market forces, especially by demand and supply, has not yielded the expected result because of the supply end of the curve.
To address this, the central bank said BDC operators must sell FX to their customers within a permissible range of -2.5 per cent to 2.5 per cent of the previous day’s Nigerian foreign exchange market window-weighted average rate, which is the official market, also known as the Investors and Exporters (I&E) segment.
In his reaction, Mr Gwadabe said his group was happy that the central bank is carrying ABCON along in the forex reform policy.
“What this portends is the opportunity for BDCS to play as a third leg of the official window in meeting the demands at the critical retail end of the market where volatility is pervasive,” he said.
However, he said ABCON expects the CBN “to make BDC liquidity active through windows like banks autonomous windows and the agency of international money transfer operators.”
He charged members of the association “to comply with the requirements of the new circular, especially in terms of return rendition to the regulators.”
Recall that a few years ago, the central stopped the sale of FX to BDCs on the allegation that they were using the platform for the flow of illicit funds.