Bureau De Change (BDC) operators in Nigeria have raised concerns over their inability to purchase foreign exchange from banks due to the current exchange rate dynamics in the foreign exchange (forex) market.
The Association of Bureau De Change Operators of Nigeria (ABCON) disclosed that the exchange rate at the parallel market is now lower than the interbank proceeds sales to the BDCs, creating a unique challenge for currency traders.
Speaking on the issue, ABCON President, Aminu Gwadebe, in a chat on Wednesday, March 5, 2025, explained that the naira has experienced some gains and stability in the forex market.
However, he noted that licensed currency traders are not witnessing a convergence of rates between the official market and the parallel market, a situation that is constraining their operations.
“Currently, the naira has maintained its stability and appreciation in the foreign exchange market as we eventually witnessed the ultimate objective of convergence between the official market and the open market, also known as free funds or parallel markets,” Gwadebe stated.
He highlighted the current scenario where the parallel market rate is trading lower than the interbank proceeds sales to BDCs.
“For instance, yesterday, while the banks were offering a weighted average of N1,505 per dollar, the parallel market levels were at N1,503 per dollar, which makes it difficult for BDCs to purchase from the banks,” he explained.
This development, he noted, has limited the ability of BDC operators to participate effectively in forex transactions, as the cost of purchasing foreign currency from banks is higher than what is obtainable in the parallel market.
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In response to these challenges, Gwadebe called on the Central Bank of Nigeria (CBN) to introduce a prudential percentage on the volume of sales of diaspora remittances and portfolio investment proceeds by banks to BDC operators.
He believes this measure will help sustain forex supply and curb illicit economic activities such as currency speculation and unnecessary forex demands.
“It is, however, not yet an Uhuru without a continuing regulatory oversight on transparency of participants, especially regarding the maximum margin on sales by banks to BDCs.
“The CBN should issue a prudential percentage on volumes of sales of diaspora remittances and portfolio investment proceeds by banks to BDCs to continue ushering in supply while discouraging illegal economic behaviors,” he advised.
He further urged the CBN not to abandon its intervention sales to BDCs, describing them as a key component in stabilizing the forex market. 7
“The CBN should also not abandon the calibration of their intervention sales to BDCs as the catalytic actor in the foreign exchange market, ensuring continued support for the naira’s strength,” he emphasized.
Beyond forex concerns, the ABCON President also called on the fiscal authorities to reduce the country’s fiscal deficit, which he described as an impediment to stable exchange rate determination.
He stressed the importance of maintaining downward inflationary trends in the prices of goods and services, urging government agencies and state governments to declare a state of emergency on inflation to alleviate the financial burden on Nigerians.
In a related development, ABCON had earlier praised its members for effectively implementing the CBN’s forex policy on the sales of interbank/EFEM proceeds to BDC operators.
The association noted that the gradual implementation of this policy by banks has significantly contributed to the recent appreciation of the naira.
Gwadebe pointed out that the steady sale of interbank/EFEM proceeds to BDCs has played a crucial role in strengthening the naira.
He urged the CBN to continue collaborating with licensed BDC operators to ensure a steady supply of foreign exchange, particularly at the retail end of the market, where volatility is more pronounced.
Recent reports indicate that BDC operators have linked the naira’s strong performance to the implementation of the CBN policy, which permits authorized dealers to sell foreign exchange directly to licensed currency traders.
According to BDC operators, there has been a notable increase in forex inflow into the interbank window, with growing investor confidence and significant portfolio investments into Nigerian banks.