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.
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.