CBN’s rates disparity may stifle exchange rate convergence, job losses – BDCs

Bureau de change operator faces N2.1m fraud
United Bank for Africa

The Association of Bureau de Change Operators of Nigeria (ABCON) has said that disparity in foreign exchange rates sold by CBN might stifle efforts at rates convergence and might lead to job losses.

ABCON President, Alhaji Aminu Gwadabe, said this in an interview with Newsverge on Thursday in Lagos.

Gwadabe said that the CBN had continuously sold forign exchange to BDCs, Travelex, and commercial banks at different rates and this could be used by speculators to distabilise the market.

“The CBN sells dollars to BDCs at N381 and are expected to sell at N399, while the CBN sells dollar to Travelex, also a BDC and banks at N315 and are expected to sell at N375.

“While Travelex and banks are expected by a CBN circular to settle such transactions at a rate not exceeding 20 per cent above the interbank market rate, BDCs only sell at five per cent margin.

“Twenty per cent profit margin from FOREX is the highest in the world, ’’Gwadabe said.

According to him, recent development at the foreign exchange market has shown that if the CBN does not eliminate the disparity in rates prevalent at the market, BDCs will be technically hedged out of the market.

Gwadabe said that hedging out about 3, 200 CBN registered BDCs from the foreign exchange market would lead to over 30, 000 job losses in an economy that was gradually recovering from recession.

He said that his members were already losing customers due to the challenge of rate disparity as naira continued to appreciate against the dollar at the parallel market.

Gwadabe appealed to the CBN to urgently see that the rates were harmonised to save a critical section of the nation’s foreign exchange market.

The ABCON chief said that as far as street hawkers were still plying their trade, rate convergence would be a mirage.

The financial expert said that the CBN could achieve rate convergence if there was sustained liquidity in the market, adding that a fair level playing ground for all operators would also lead to rate convergence.

Newsverge reports that the CBN rose from its last Monetary Policy Committee (MPC) meeting with a vow to see rates convergence at the nation’s FOREX market.