March 27, 2017
Business seems bad for Bureaux De Change (BDCs) - no thanks to the naira's new strength that has hit them with heavy losses.
The naira has strengthened below N381 to the dollar, the rate at which BDCs buy International Money Transfer Operators (IMTOS) cash from the Central Bank of Nigeria (CBN).
The naira exchanged at N375 to the dollar in the parallel market at the weekend.
It is tipped to gain more within the week as the CBN sustains dollar interventions in the interbank market.
About $1.5 billion has been injected into the interbank market since February when the interventions started.
Association of Bureaux De Change Operators of Nigeria (ABCON) President Aminu Gwadabe, who hinted of some BDCs likely closure after losing N130 million within the week, said the losses came from the disparity in applicable exchange rates among players in the market. He, therefore, called for rates harmonisation to give all players a level playing field.
According to him, the public has refused to buy foreign exchange from BDCs for invisibles, such as medicals, school fees, and personal and business travel allowances, at a rate above N375 to the dollar.
Commercial banks are selling the dollar for invisibles at N375. The parallel market rate closed at N380 last week. The BDCs, Gwadabe said, were at the receiving end of the market because they bought dollars at N381 and sold at N399, which is far higher than even the parallel market rate.
"All the banks' selling rates are higher than even the purchasing rates of BDCs, let alone our selling rates. No one is presently buying from the BDCs. I managed to sell only $4,000 last week at N385, how are we going to survive?", he asked.
"The development has been communicated to the CBN and relevant agencies for intervention and the CBN is giving it its attention. If the scenario is not reversed immediately, the CBN licensed BDCs of over 3,000 with 30,000 workers will be technically edged out of the market," he said.
Continuing, Gwadabe urged the CBN to provide a level-playing field for all operators, because they are all operating within same market, and selling the same product.
Gwadabe said once the BDCs are no longer in the foreign exchange business, currency speculators will take over the market and that will not be good for the naira.
Stakeholders hope that the sustenance of the CBN's efforts at the interbank market will further drive down the value of the dollar.
The naira has appreciated by 13 per cent in the parallel market in the last one week. The currency traded at N440 last Monday. It closed at N380 to the dollar at the weekend.
Experts have praised the CBN for its intervention at the foreign exchange market. They urged the apex bank to eliminate the multiple rates in the market.
As the naira continues to appreciate, experts say it is necessary for the CBN to adjust applicable rates in various segments of the market in the overall interest of the economy.
The CBN said yesterday that the dollar would be weakening further this week as it plans yet another round of interventions in the interbank market. It plans to pump in more dollars into the interbank market to meet the demands of wholesale and retail customers as well as strengthen the value of the naira against other international currencies.
The planned move by the CBN, sources say, will further firm up the naira against other currencies as the exchange rates of the greenback and the United Kingdom Pound Sterling continue to move southwards.
The Euro and the Pound exchanged at the parallel market at the weekend at N405 and N475. The figures will further nosedive this week, according to experts.
The Acting Director, Corporate Communications Department, CBN, Isaac Okorafor, confirmed the plan to inject more foreign exchange into the market.