The Association of Bureaux De Change Operators of Nigeria (ABCON), representing all Central Bank of Nigeria (CBN)-Licensed Bureaux De Change (BDCs) in the country, has urgently appealed to the Central Bank of Nigeria (CBN) for a downward adjustment of its applicable Exchange Rate. Currently pegged at N1,251/$ for BDCs, ABCON advocates a reduction below this threshold.
This plea comes at a significant juncture, with the unofficial market rates reaching a historic low of N1,235/$—a first in 15 years—underscoring the urgency for CBN intervention. The official BDCs applicable buying exchange rate, set at N1,251/$ (with a 1.5 percent margin) by the CBN's latest intervention, is now higher than the unofficial market rate.
ABCON emphasizes that the swift recovery of the naira, surpassing expectations, has rendered the CBN's selling rate to BDCs prohibitively expensive and challenging to offload to retail buyers. As a result, consumers are turning to undocumented forex operators for cheaper rates, circumventing BDC services.
Urge for Swift Action Amid Currency Concerns
In a comprehensive letter addressed to the Director of the Trade & Exchange Department at the Central Bank of Nigeria (CBN), ABCON, under the signature of its esteemed National President, Alhaji (Dr.) Aminu Gwadabe, articulated a series of pressing concerns.
ABCON expressed grave apprehensions regarding the situation faced by numerous Bureaux De Change (BDCs) who, despite funding their accounts for dollar allocations, have yet to receive their allocated dollars. This delay is attributed to the meticulous scrutiny of documents at designated centers, leaving BDCs vulnerable to exchange rate risks and substantial losses.
The association emphasized that, amidst the appreciation of the naira across various markets, many BDCs who purchased dollars at the rate of N1,251/$ face the prospect of significant income and capital losses if they were to sell at the current open market rate of N1,235/$. Consequently, ABCON vehemently advocates for a downward revision of the applicable exchange rate for the period, with a continuous commitment to bolstering the sovereignty of the naira.
"We have observed a concerning trend where numerous members, having paid for dollar allocations at N1,251/$ with a margin of 1.5 percent, are still awaiting disbursement. This predicament persists despite the prevailing open market rate of N1,235/$, which stands lower than the authorized applicable exchange rate set by the CBN for BDCs," the statement elucidated.
ABCON Praises CBN, Seeks Adjustment
Despite recent developments, ABCON commended the CBN's leadership for its initiative in recalling BDCs into the official FX window and implementing measures to fortify the naira against the dollar and other global currencies. ABCON highlighted the swift positive outcomes of the CBN's efforts to restore the naira's strength, emphasizing its dedication to collaborating with the apex bank to achieve the government's objectives of exchange rate stability and economic growth.
ABCON noted that ongoing market trends indicate a willingness of the market to self-correct, with a realistic price discovery leading to further appreciation. This positive outlook is supported by increasing sources of foreign exchange inflows facilitated by CBN policies.
"In light of these market developments, we hereby appeal for a downward review of our funding rate from the last tranche (2nd bidding) of N1,251/$ to reflect the current market rate discovery. Such an adjustment is crucial to enable our members to align their holding positions," the statement emphasized.
Additionally, ABCON urged for a review of the payment process at various disbursement centers, advocating for immediate to medium-term automation to ensure timely payments while adhering to the swift nature of their transactions.
By the offer and acceptance rule, the group also urged the approval of refunds to individuals who have funded their accounts but are yet to receive disbursements. They emphasized the importance of allowing the market to determine the present rate in the future.
Additionally, ABCON requested that the apex bank implement a cut-off time for payments and bid collection. They argued that the current open-ended system lacks effectiveness in administering and controlling the process.