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The Association of Bureaux De Change Operators of Nigeria (ABCON) has issued an appeal to the Central Bank of Nigeria (CBN) to consider lowering its applicable exchange rate, currently set at N1,251/$, for its members in light of market dynamics.
Aminu Gwadabe, the national president of ABCON, conveyed this appeal in a letter addressed to the Director of the CBN’s Trade & Exchange Department.
The call for adjustment arises from the discrepancy between the parallel market rate, which stands at 1,235/$, and the BDCs’ applicable buying exchange rate of 1,251/$ (plus a 1.5% margin) mandated by the CBN in its latest intervention measures.
Gwadabe expressed concerns over the challenges faced by BDCs in offloading the CBN’s expensive selling rate to retail end buyers, who are turning to informal forex operators offering cheaper rates.
Moreover, he highlighted the plight of many BDCs that have paid for dollar allocations at the prescribed rate but are yet to receive their disbursements, leaving them exposed to exchange rate risks and potential losses.
ABCON acknowledged the CBN’s efforts to restore stability to the forex market and strengthen the naira against global currencies. However, it stressed the need for a review of the current funding rate to reflect the prevailing market conditions and facilitate timely disbursements to BDCs.
In its appeal, ABCON requested a downward review of the funding rate from N1,251/$ to align with the current market rate discovery, enabling its members to adjust their holding positions accordingly.
Additionally, the association called for improvements in the payment process at disbursement centers, advocating for medium-term automation to enhance efficiency and timeliness. It proposed the introduction of a cut-off time for payments and bid collection to streamline the process and minimize operational uncertainties.
ABCON emphasized that addressing the exchange rate disparity requires a swift response from the CBN to instill confidence among BDC operators and foster their active participation in the intervention programs.
ABCON urged the CBN to take decisive action to bridge the gap in exchange rates, thereby bolstering the effectiveness of ongoing interventions and supporting the stability of the forex market.
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