ABCON appeals to CBN to review dollar buying rate

The Association of Bureau de Change Operators of Nigeria (ABCON) at the weekend appealed to the Central Bank of Nigeria (CBN) to review dollar buying rate for BDCs downwards from N360 to N350/$1. Currently, the parallel market and BDCs rates are trading around N360 to the dollar.
In a statement, ABCON President, Alhaji Aminu Gwadade indicated that owing to the central bank’s intervention in the FX market, which has led to a convergence of the BDC and parallel market rates, his members were finding it difficult to attract patronage.
“For now, parallel market operators are taking over our business because BDC rates and their selling rates are the same and this has to change,” Gwadabe lamented.
He also called on the CBN to ensure that the stability in the FX market is sustained. According to Gwadabe, the standard/average trade margin for BDCs across the world is 12 per cent, saying reviewing the rate to N350/$1 would be less than three per cent for Nigerian operators.
“The CBN should be proactive enough to quickly review the BDC buying rate so as to bring the foreign exchange transfer rate down and boost market stability.
“The BDC rate should be brought down to N350/$1 for now and see the positive impact on the local currency,” he said.
Gwadabe said BDCs would continue to support the CBN’s determination to achieve stability in the market and strengthen the value of the local currency.
He also called on the CBN to increase the volume of PTA from $4,000 to $8,000; BTAs from $5,000 to $10,000; school fees from $5,000 to $20,000; and medicals from $5,000 to $15,000 quarterly, in order to deepen liquidity in the market.
Gwadade said implementing these recommendations would help to stop, what in his opinion was “a new wave of volatility building up in the FX market over the parallel market/BDC rate convergence”.
He added that with the FX transfer rate at N375/$1, which is N15 higher than the N360/$1 cash rate, currency speculators were mopping up dollars and moving them to Dubai, China and Lebanon from where they transfer them back to the country and make huge margins.
Gwadabe, nonetheless, lauded the CBN for liberalising the FX market and making more dollars available to his members.
“We are happy that the CBN is liberalising the foreign exchange market to ensure that its objective of deepening the market is achieved.
“We applaud its decision of allowing authorised dealers in interbank trading to release excess foreign exchange trading positions to other authorised dealers without seeking prior approval from the CBN,” he said.
Gwadabe also said the creation of the investors’ and exporters’ window was also part of CBN’s efforts to further develop the FX market and improve market structure.
“What stops the CBN from raising the PTA and BTA to $8,000 and $10,000 per quarter? The school fees and medicals should also be increased to $20,000 and $15,000 respectively, to put more dollars in the hands of end-users.
“That way, the liquidity that is coming from liberalisation of the FX market will be absorbed,” he said.