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Home Business News

The CBN dollar rain has left some people hurting

Onome Ohwovoriole by Onome Ohwovoriole
October 17, 2017
in Business News
Emefiele’s reappointment
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Bureau De Change (BDC) operators in the country are unhappy with the rate at which the Central Bank of Nigeria (CBN) sells foreign exchange to them, which is higher than that given to banks. This has led to a drop in BDC participation in a weekly auction held by the CBN.

“Many BDCs no longer participate in the weekly forex bid sessions because clients are no longer coming forward to buy dollars from us as frequently as they used to do in the past.
“The reason is not just that the CBN is flooding the market with dollars, but it has to do with the fact that it (CBN) is selling dollars at a discount to the banks

Why the BDC operators are unhappy

The apex bank currently sells foreign exchange to banks at N305 to the dollar, and N360 to the BDCs. Customers in need of foreign exchange, thus prefer to buy from the banks due to the cheaper rate. The move has left BDC’s struggling to get patronage.

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Why the CBN has done this

The CBN, a few months ago began the direct sale of foreign exchange to commercial banks, in a bid to alleviate the foreign exchange scarcity, and pressure on the black market which pushed the exchange rate to as high as N450 a dollar. The bank is also aiming at a convergence of exchange rate, in other words having just one exchange rate across all sellers. BDC exchange rates have in recent times being prone to abuse, with many of them selling way higher than the approved rate. The CBN has sold over $7 billion in the markets in a bid to keep the exchange rate within its preferred band, and has shown no sign of slowing down.


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Tags: Bureaux De Change (BDC)CBN Forex PolicyNews Review
Onome Ohwovoriole

Onome Ohwovoriole

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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