CBN’s forex disparity rates ‘ll fuel round tripping – Expert

Financial experts have urged the Central Bank of Nigeria to immediately discontinue with the disparity in its rates at the foreign exchange market in the overall interest of the economy.

According to Prof Sherifdeen Tella, a Senior Economist at the Olabisi Onabanjo University, Ago Iwoye, Ogun State, the CBN’s rate disparity would fuel round tripping in the market. “It is unfortunate that the CBN is engaging in such disparity. Multiple rates create very serious problems for the economy,” he said.

The don noted that since the beginning of 2016, the policies of the CBN had not been friendly to the economy. He added that if any sub-sector should get a favourable rate, it should be the manufacturing sector because of its potential for growing the economy.

Femi Ekundayo, a former President, Chartered Institute of Bankers of Nigeria, also agreed with the don that round tripping was the bane of the foreign exchange market. He said if the CBN goes around giving different rates to different players in the same market, then it should offer an explanation.

Speaking on the implication for the BDCs, Alhaji Aminu Gwadabe, President of Association of Bureau De Change Operators of Nigeria (ABCON) told National Daily that the CBN had sold forex to Travelex and commercial banks at same rates, while BDCs are offered different rates. He said this disparity could be used by speculators to destabilize the market

According to him, The CBN sells dollars to the BDCs at N381 and are expected to sell at N399, while the CBN sells dollars to Travelex, also a BDC, and the banks at N315 and are expected to sell at N375.

“While Travelex and the banks are expected by a CBN circular to settle such transactions at a rate not exceeding 20 per cent above the interbank market rate, the BDCs only sell at five per cent margin.

National Daily findings revealed that the rate at which the CBN sells the dollar to the BDCs is no longer tenable as the naira continues to appreciate against the dollar at the parallel market while it remains static N307 at the interbank market.

Unless the CBN takes immediate steps to adjust the rates at the BDC sub sector, a critical arm of the foreign exchange market will be undermined with its attendant consequences for the economy.

Nigeria’s naira firmed to 390 per dollar on the black market on Friday, up 2.6 percent from its previous session and near the central bank’s rate for consumers, traders said.
The bank has been intervening on the official market to try to narrow the currency spread with the black market rate, which was 520 to the dollar a month ago after it devalued the naira for retail customers to 375.