BDCs task CBN on multiple FX rates, threaten to boycott dollar sales

By Odunewu Segun

Members of the Association of Bureau De Change Operators of Nigeria have said they could boycott the Central Bank of Nigeria new FX rates unless the regulator reviews rates for exchange BDCs in addition to addressing the multiplicity of rates in the market.

President ABCON, Aminu Gwadabe, told National Daily his members had incurred currency losses of 130 million naira based on trading at the old rate after the CBN interventions caused the naira to rally on the black market.

He disclosed that the CBN would sell $8,000 each to his members this week at a rate of 360 per dollar, which they would resell to consumers at a profit margin of 2 naira.

With the Nigerian FX market battling multiple exchange rates in the system, analysts have argued that the system may actually be hurting that Nigeria’s naira assets as investors find it hard to price them.

According to National Daily findings, currently Nigeria operates about four exchange rates- the official one, the black market, a rate for Muslim pilgrims going to Saudi Arabia and a rate for foreign travel, school and medical fees.

On Monday, the CBN set a rate of 360 naira per dollar for consumers with certain foreign expenses sourcing hard currency through commercial lenders, and stepped up intervention on the official market to narrow the gap with the black market.

The bank sold $1.5 million on Tuesday to boost liquidity but also sold the naira at 306.15 on the spot market, 20 percent weaker than the black market rate.

The central bank, which opposes a free naira float, has been selling the U.S. currency on the official market to try to narrow the spread with the black market rate, which is currently 375, down from 520 per dollar a month ago.

It also set a new naira rate for retail exchange bureaus to sell dollars to consumers. The new rate of 362 per dollar is an 11 percent rise from the last setting in January and will bring the selling price at bureaus close to another consumer rate set on Monday.