Bureau De Change (BDC) operators under the aegis of the Association of Bureau De Change Operators of Nigeria (ABCON) say that they are constrained from purchasing foreign exchange from the banks.
The BDC operators attributed this to the recent situation where the exchange rate at the parallel market is trading lower than the interbank proceeds sales to the BDCs.
This disclosure is contained in a chat with the ABCON President, Aminu Gwadebe, on Wednesday, March 5, 2025, where he noted that the naira now enjoys some gains and stability in the forex market.
Convergence of official and parallel markets
Gwadebe said that the licensed currency traders are not witnessing a convergence of rates between the official market and the parallel market.
The ABCON boss said, ‘’Currently the naira has maintained its stability and appreciation in the foreign exchange market as we eventually witnessed the ultimate objectives of the convergence of the official market and the open market aka free funds/ parallel markets.
‘’Conversely, what we are witnessing now is a situation where the parallel market rate is even trading lower than the interbank proceeds sales to BDCs.
‘’For instance, yesterday, while the banks are offering a weighted average of N1505/$, the parallel market levels were at N1503/$ which even makes the BDCs constrained to buy from the Banks.’’
Sales of diaspora remittances and portfolio investment proceeds to BDCs
Gwadebe urged the Central Bank of Nigeria (CBN) to issue a prudential percentage on volumes of sales on diaspora remittances and portfolio investment proceeds by the banks to the BDC operators.
This he said will help to sustain forex supply and discourage the illegal economic behavior of currency substitution, speculation, and discretionary demands that are frivolous in nature.
He said, ‘’It is, however, not yet an Uhuru without a continuing regulatory oversight on transparency of participants as regards the maximum margin on sales by the banks to the BDCs.
‘’Also, it is for the CBN to issue a prudential percentage on volumes of sales on Diaspora’s remittance, portfolio investment proceeds by banks to BDCs to continue to usher in supply and thereby discouraging the illegal economic behavior of currency substitution, speculation and discretionary demands that are frivolous in nature.
‘’Lastly, the CBN should also not abandon the calibration of their intervention sales to the BDCs as the catalytic actor in the foreign exchange market to continue to back the naira strength.
‘’Finally, I also commend the fiscal authorities on their efforts to reduce the fiscal deficit that is an albatross on our exchange rate determination.
‘’I also call on them to maintain the relative downward inflationary trends in the prices of goods and services by calling all the Government agencies and state Governments to declare a state of emergency on inflation in order to alleviate the sufferings of many Nigerians.’’
What you should know
In a related development, ABCON had a few weeks ago praised its members for the effective implementation of the CBN forex policy on the sales of interbank/EFEM proceeds to BDC operators.
- The association also noted that the gradual implementation of the policy by the banks has contributed greatly to the recent significant appreciation of the naira.
- Gwadebe said that the gradual implementation of the sales of interbank/EFEM proceeds to BDCS by banks has ushered in a significant naira appreciation in the market.
- He urged the CBN to continue to collaborate with the licensed BDC operators to ensure an adequate supply of foreign exchange in the retail end of the market where volatility is pervasive.
Nairametrics had earlier reported that the BDC operators had attributed the recent strong performance of the naira to the implementation of the CBN policy which allows authorized dealers to sell foreign exchange directly to these licensed currency traders.
The BDC operators revealed that there is a lot of forex inflow coming into the interbank window with growing investors’ confidence and huge portfolio investments coming into the banks.
