Banks refusal to sell forex to BDCs will have adverse effects on exchange rates – ABCON

The unwillingness of banks to sell dollar to Bureax de change (BDC) operators despite the Central Bank of Nigeria directive to do so is said to be adversely affecting the expected positive impacts on the exchange rates.

The CBN had over the weekend, lifted its six-month ban on forex sales to BDC operators. In a circular to authorised dealers titled: “Sales of Foreign currency proceeds of international money transfers to Bureaux De Change operators”, signed by the CBN Acting Director, Trade & Exchange, W.D Gotring, the apex bank said the policy shift would ensure the stability of the exchange rate and boost participation of all critical stakeholders in the foreign exchange market.

Confirming the development, President Association of Bureau De Change Operators of Nigeria (ABCON) Aminu Gwadabe, said the lenders have shown high level of unpreparedness to execute the CBN’s directive to sell the greenback to BDCs.

According to Gwadebe, BDCs have no direct access to Western Union and MoneyGram, which are the key international money transfer agents, hence the operators rely on banks to access the funds.

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He also disclosed that most of the offshore inflows are dry transactions, meaning that they are cash-in cash-out deals with nothing left for BDCs.

Gwadabe said the CBN should give the BDCs the sole right to sell Business Travel Allowances (BTAs) and Personal Travel Allowances (PATs) to enable them fix demand at the retail end of the market. “The policy has positive impact on rates. The naira today (yesterday) exchanged at N374 to dollar against, N378 last Friday”.

However, on the official market, the naira yesterday slipped 2.5 per cent to a new closing low of N310 per dollar, failing to lure in local investors or foreign players as trade dried up a day before an expected interest rate hike from the CBN.

The currency had opened at a record low of 302.10 and traded a total of just $8.64 million by the close, far less than $100.54 million on Friday, when the CBN spurred the market by selling some of its dollars.