Breaking News: Bureau De change (BDC) operators in Nigeria are lamenting that irregular and inconsistent supply of dollar from the Central Bank of Nigeria is stalling their operations in the country.
The BDC Operators are calling for the CBN to increase the frequency (and volume) of supply of dollar to at least once or twice every week.
On July 18 2024 the CBN sold $20,000 to each authorized BDC operators at the rate of N1450 per dollar in a bid ease the current forex scarcity and strengthen the naira. But the $20,000 supplied is a rather low volume of forex unable to meet the high demand for forex at the markets.
The demand for forex is quite high with a dollar currently selling for N1600.
9AM News Nigeria recounts that the latest disbursement of forex by the CBN is the fifth time since 2021 when the bank would be making forex available to the BDC, after a long embargo was placed on forex supplies following revelations that illegal and inappropriate practices were being done by BDC traders.
The embargo was however lifted earlier in the year after the CBN delisted 4,173 BDC operators.
CBN On Supply Of Forex TO BDC’s
The CBN eventually yielded to pressure and resumed supply of forex to BDCs with an issuance of strict guidelines which they must adhere to.
It also introduced the Dutch Auction System through which businesses in need of forex can access forex directly from the apex bank. So far the CBN has sold $876.3 million to end users through the Dutch Auction System.
Ogasabi of 9AM News Nigeria wonders why despite the direct intervention of the CBN in the forex market, exchange rates remain high with a dollar selling at between N1550 – N1600. The DBCs are saying that the current frequency and volume of supply is not nearly enough to satisfy the market hence resulting in the scarcity and high cost of forex.
Demand And Supply Of Currencies
In a statement made available to 9AM News Nigeria, the president of the Bureau De Change operators in Nigeria Musa Gwadebe noted that the high and surging demand for dollars coupled with low supply has resulted in making the naira weaker.
“The problem is the streamlining, only once, is it on the 18th of July or so? Like you said about 3 weeks, till now not any sales again.’’
“They resumed sales sometime in January, then around March, April, they withdrew completely and then in the middle of last month around 18th of July they came up with an announcement to sell $20,000. Before then the rates were hovering around N1650 or thereabout, so when they came out there was impact because the rate also came down to below N1600 to about N1580 thereabout.
‘’So you know the thing is continuity, once people know that it is not what is coming frequently, before you know it people will now lose confidence again because our customers cannot wait without any information as to when they will get forex after which they will get their ticket and then travel. So that really will push the pressure back to the parallel market, so that’s the problem”.
“Every week, you know there was a time we were collecting three times a week, we want it sometimes twice a week, but even if it is once a week with frequency and volume and in line with cut-off time, so that will make everybody go to the market at the same time and the liquidity will come to the market at the same time. But if I know the window is open for one month for me to buy and with no cut-off time and then I am not sure when it will come again, people will not be encouraged to really come into the market.’’
Gwadebe added, ‘’There are some of us looking at it, you know the payment centres are centralized, so some people honestly you know are not encouraged because you will go today they will say come tomorrow, you will go tomorrow they will say come next tomorrow, so also the operational difficulty sometimes, even though they are trying to also improve on that to the extent you see some people they will pay in their money it will take them 3 to 4 days without even getting their payment (dollar sales), so those are some of the challenges.’’
