Operators of bureaux de change in the country, under the aegis of Association of Bureaux De Change Operators of Nigeria (ABCON) have called for exchange rate cut in their segment.
They advised the Central Bank of Nigeria (CBN) to immediately take position to ensure that ongoing recovery of the naira against dollar, currently at N367 per dollar, is sustained.
ABCON President, Alhaji Aminu Gwadade, who spoke to newsmen, said the CBN should review BDCs dollar buying rate downwards from N360 to N350/$1 and enhance security surveillance at the boarders to check illegal cash movement that has long posed dire consequences on naira’s stability
This means that the operators are seeking a N12 margin from what they are offered at the official window.
Gwadabe said the standard/average trade margin for BDCs across the world is 12 per cent and reviewing the rate to N350/$1 is less than three per cent for Nigerian operators.
“The CBN should be proactive enough to quickly review the BDC buying rate 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 the rate challenges faced by BDCs, if not checked, would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar.
He however, assured that BDCs will continue to support CBN’s determination to achieve exchange rate stability, and strengthen the value of the local currency.
“For now, the parallel market operators are taking over our business because BDCs rates and their selling rates are the same and this has to change,” he said.
He also called on the CBN to increase the volume of Personal Travel Allowances (PTAs) from $4,000 to $8,000; Business Travel Allowances (BTAs) from $5,000 to $10,000; school fees from $5,000 to $20,000 and medicals from $5,000 to $15,000 quarterly to deepen liquidity in the market.
According to him, implementing these recommendations will help to stop a new wave of volatility building up in the forex market over parallel market/BDCs rate convergence.
Both the parallel market and BDCs rate are trading around N360/$1, and the BDCs buy the International Money Transfer Operators (IMTOs) proceeds from the CBN at N360/$1.
He disclosed that with forex transfer rate at N375/$1, which is N15 higher than N360/$1 cash rate, rent seekers are mopping up dollars and moving them to Dubai, China and Lebanon from where they transfer them back to the country and make huge margins.
The group praised CBN for liberalizing the forex market and making more dollars available, but regretted that such funds are not really accessible in right volumes to the critical stakeholders like BDCs, adding that increasing the volume of PTAs, BTAs, school fess and medicals will help to make more funds available to end users.
“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 authorized 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 coming of Investors and Exporters (I&E) Forex Window, was also part of CBN’s efforts to further develop the Nigerian forex market and improve market structure.
Part of the liberalisation policy, he added, is the directive that all interbank trades, spot, forwards, futures, options and swaps that impact on authorised dealers limit comply with rate reasonability standards.
He reiterated that the forex liberalisation policy has created more liquidity in the market, except that such funds are not accessible in the right proportions to key stakeholders.
“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 forex market will be absorbed,” he said.