CBN forex guidelines to fuel cartel – ABCON President

The President, Association of Bureau de Change of Nigeria (ABCON), Mr. Aminu Gwadabe, said the Central Bank of Nigeria (CBN) new foreign exchange policy regime would fuel cartel in the foreign exchange market.

The BDC chairperson speaking with Business247 lamented over a number of issues which he claimed will erode the aspirations of BDCs operators in the country.

The CBN recently rolled out guidelines for primary dealers – banks that will play directly in the market – with conditions that they must have at least N200 billion in shareholders’ funds, N400 billion worth of forex assets and 40per cent liquidity ratio, although those who meet two of the requirements will qualify.

He said that no BDC operator could raised the minimum cash requirement pegged by the apex bank to operate in the new open market operation where the forces of demand and supply would be the determinant of FX price with minimal CBN intervention on occasional bases.

Other areas of dissatisfaction for the BDCs operators he alleged were that the new CBN FX policy has been formulated to formerly recognise the operations of the black market operators, dding that the new policy takeoff had already created monopoly to selected few in the financial market.

Gwadabe said, “The BDCS aspirations in the new policy is completely killed and lack support for the survival of the BDCs. The new single market structure is compromised and meant solely for few cartels in the market. No BDCs can meet up minimum cash requirement of N600billion,” he lamented.

While questioning the role the to-be authorised Foreign Exchange Market Primary Dealer (FXPD) would be playing, he disclosed that  FXPD were supposed to be bring in dollar into the country and not to engage buying off the ones (dollar) in circulation which he claimed were already in shortfall.

He said, “The present dollar liquidity situation in the economy cannot support the primary dealer structure.

“The role of the primary dealers should be to inflow dollars from abroad not to be buying the limited available dollars of the CBN and circulate in the economy.”

It would be recalled that CBN last week announced a full float of the Naira, meaning that the foreign exchange market will be market-driven with occasional interventions by the apex bank.