Nigeria – Bureau de Change (BDC) operators have responded to the declining value of the Naira in the foreign exchange market since the unification of all exchange rate windows. They are calling for greater participation and involvement in the foreign exchange market to support the success of the Central Bank of Nigeria’s (CBN) new exchange rate policy.
The exchange rate between the Naira and the British Pound recently surpassed N1,000/£ for a week due to strong demand in the parallel market. Additionally, the Naira has depreciated against the US Dollar, reaching N800/$ for major black-market operators.
The CBN’s decision to abolish certain segments of the official forex market in favor of the I&E (Investors and Exporters) window, which follows a “willing buyer and willing seller” approach, has faced criticism from BDC forex dealers. These operators argue that the CBN should collaborate with them, recognizing their crucial role in addressing the retail end of the market and ensuring exchange rate stability within the country’s economy.
Aminu Gwadebe, the President of the Association of Bureaux De Change Operators of Nigeria (ABCON), expressed dissatisfaction with the exclusion of BDCs from the I&E window. Gwadebe highlighted the substantial exchange rate disparity of approximately N30 between the I&E window and the parallel market. He emphasized that the CBN has yet to adequately address the retail end of the market, which is primarily served by BDCs, contributing to the market’s volatility.
The BDC operators’ call for increased participation in the foreign exchange market reflects their desire to play a more significant role in maintaining exchange rate stability and ensuring a balanced market that benefits the Nigerian economy.
“The forex market is not competitive because of the limited number of participants. The other one is the issue of liquidity and then legislation with respect to the FMDQ. The legislation is expected to allow participants, including the BDCs, to be part of the forex market.
“We are talking about sustainability now and that market (forex market) will drive sustainability in terms of inflow to address liquidity issues. Fortunately or unfortunately, the banks are even now formalizing Bureau De Change or do I say parallel market operations.’’
He called for legislation to support the existing policies and strengthen the operations of FMDQ, which manages the forex market.
They argued that the new exchange rate policy has not significantly affected their business, stating that it is a mixed situation, calling for a more inclusive approach in the foreign exchange market and seeking legislative support to enhance liquidity, competitiveness, and sustainability in the market.