One way to reduce the pressure in the foreign exchange market is for the Central Bank of Nigeria (CBN) to resume the sale of dollars to BDcs.
This was disclosed by the Founder of Agusto & Co Limited, Mr Bode Agusto during a webinar titled, “Nigeria in 2022- Will 2022 Be a Year of Strong Growth Driven by Herd Immunity from COVID-19?”
He also projected that if the CBN maintains its current stands not to sell dollars directly to the Bureau De Change (BDC) operators, the Naira to exchange rate would depreciate to N620/$1 in the parallel market before the end of 2022.
What he’s saying
Bode Agusto stated that the Naira would continue to suffer in the parrel market if additional liquidity is not brought into the market through the BDCs. He said, “We see continued pressure on the parallel market exchange rates. And the only way to reduce pressure in the parallel market is to throw money thereby selling dollars to the BDCs. If there is no additional funding to the BDCs from the CBN then the parallel market rate will be between N610 and N620 in 2022. It will be fueled by scarcity and the difference between inflation rates of the dollar and the Naira.”
He also predicted that the much-anticipated rate convergence in the foreign exchange market would take longer than expected since the central bank would be hell-bent on pegging the official rate.
He stated that a convergence would make Nigeria have a single exchange rate, where the parallel market premium is less than 3.0% of the official rate.
He also complained about the neglect of the growing Nigerian debts. Agusto said, “The federal government says ‘we don’t have a debt problem and that we have a revenue problem.’ But I disagree completely. We have a debt problem that we are not taking very seriously. We are taking it lightly.”
What you should know about the CBN BDC ban
- At the Monetary Policy Committee (MPC) meeting on Tuesday, July 27, 2021, the Central Bank of Nigeria hit at the Bureau De Change (BDC) for illegal forex trading and stated that it will henceforth discontinue the sale of forex to the Bureau operators in Nigeria.
- The CBN Governor, Godwin Emefiele, also announced a halt on the licensing of new Bureau De Change (BDC) operators and further processing of BDC applications for forex across the country.
- The CBN had directed Deposit Money Banks (DMBs) to set up teller points in designated branches for the sale of foreign exchange to meet legitimate forex requests of their customers.
- In complying with the CBN’s directive, deposit money banks in the country swiftly moved to set up teller points within their banking halls to attend to the forex needs of customers.
- Nairametrics reported BDC uses customers who have proper documentation such as passport and travel documents to collect the maximum amount for personal travel allowance (PTAs) or business travel allowance (BTAs) from the banks
- All commercial banks have been ordered by the Central Bank of Nigeria (CBN) to publish on their websites, the names and Bank Verification Numbers (BVN) of customers who participate in fraudulent and unscrupulous tactics to obtain foreign exchange from banks.
- The Central Bank of Nigeria has stated that travellers who purchase foreign money from banks for travel purposes but do not depart two weeks after their scheduled departure date must return the currency to the banks.