Bureaux De Change operators are lamenting that they have been suffering losses in foreign exchange (FX) transactions, begging the Central Bank of Nigeria (CBN) to review its applicable FX rate downward to the operators.
The demand was conveyed by president of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe.
The apex bank recently resumed FX sales to the BDC operators and pegged the latest intervention tranche at N1,251/$1 (plus 1.5 per cent margin) to the licensed Bureaux De Change (BDC).
In a statement on Saturday, April 6, Gwadabe said the naira’s speedy recovery had made CBN’s selling rate to BDCs expensive and challenging to offload to retail end buyers.
According to him, buyers are trooping to the undocumented FX operators for cheaper rates and avoiding the BDCs’ services, prompting ABCON to write to the CBN Director, Trade & Exchange Department.
He said many BDCs that funded their accounts for dollar allocations had yet to receive their allocation of dollars to meet their clients’ legitimate critical demand.
He said this was due to scrutinizing the BDCs’ documents for collection at the various designated centres, which invariably made the BDCs vulnerable to FX risk and significant losses.
He said many BDCs that bought the dollar at N1,251/$1 would lose significant income and capital if they sold at the current open market rate of N1,235/$1, urging the CBN to review the applicable FX exchange rate for BDCs further downward.
“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5 per cent are yet to receive their disbursement.
“This is happening in the face of the prevailing open market rate of N1,235/$, which is lower than the authorised applicable exchange rate by the CBN to the BDCs,” Gwadabe said.
“It is given the above market developments that we write to appeal to your good selves for readjustments and review downwards of our funding rate of the last tranche (2nd bidding) from N1,251/$.
“This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions,” he said.
Gwadabe said ABCON was also requesting that the payment process at the various disbursement centers be reviewed immediately and automated in the medium term to achieve enhanced timely payments.
He said the group further requested that, based on the offer and acceptance rule, the approval of refunds to those who have yet to collect disbursement having funded their accounts, as the market determines the rate presently, be considered going forward.
He also seeks the apex bank to introduce a cut-off time for payments and bid collection, adding that the current open-ended system needs to be administered and controlled effectively.
“Consequently, many of our members are jittery to bid/collect their bid for fear of losing money as the current market reality has the potential to force us to sell below cost price and antithetical to recent market price discovery,” Gwadabe stressed.
He said a quick and decisive response from the apex bank could address the disturbing exchange rate disparity.
Gwadabe added that this will go a long way in bolstering the BDC operator’s confidence in the ongoing FX intervention and enhancing the operator’s participation in the bidding process.