Alhaji Aminu Gwadabe, the President, Association of Bureau De Change Operators of Nigeria (ABCON), has said that CBN-licensed BDCs would incur regulatory losses of 130 million naira this week.
Gwadabe told the News Agency of Nigeria (NAN) on Friday in Lagos that the losses were coming from the CBN’s disparity in applicable exchange rates among players in the market.
According to him, the public has refused to buy foreign exchange from BDCs for invisibles such as medicals, school fees, personal and business travels, at rates above N375 to the dollar.
Gwadabe said that the CBN had sold foreign exchange to Travelex and the commercial banks at same rates, while the BDCs are offered different rates and this could be used by speculators to destabilise the market.
“The CBN sells dollars to the BDCs at N381 and are expected to sell at N399, while the CBN sells dollars to Travelex, also a BDC and the banks at N315 and are expected to sell at N375.
“While Travelex and the banks are expected by a CBN circular to settle such transactions at a rate not exceeding 20 per cent above the interbank market rate, the 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, the BDCs will be technically hedged out of the market.
Gwadabe said that hedging out about 3, 200 CBN-licensed BDCs from the foreign exchange market would lead to over 30, 000 job losses in an economy that was gradually recovering from recession.
Meanwhile, some financial experts have urged the CBN to immediately discontinue with the disparity in its rates at the foreign exchange market, in the overall interest of the economy.
They told NAN in interviews that a standard exchange rate would be seen to be fair to all the players in the market, if the CBN was sincere in its determination for rate convergence.
Prof. Sherifdeen Tella, a Senior Economist at the Olabisi Onabanjo University, Ago Iwoye, Ogun, said that the CBN’s rate disparity would fuel round tripping in the market.
“The CBN should be seen to be in favour of a single or standard market rate.
“It is unfortunate that the CBN is engaging in such disparity.
“Multiple rates create very serious problems for the economy,’’ Tella said.
The don noted that since the beginning of 2016, the policies of the CBN had not been friendly to the economy.
He added that if any sub-sector should get a favourable rate, it should be the manufacturing sector because of its potential for growing the economy.
Mr Femi Ekundayo, a former President, Chartered Institute of Bankers of Nigeria (CIBN), also agreed with the don that round tripping was the bane of the foreign exchange market.
According to him, if the CBN goes around giving different rates to different players in the same market, then it should offer an explanation.
Ekundayo urged the CBN to carry the manufacturing sector along in its FOREX allocations to promote small scale industries.
NAN 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.
NAN further reports the rate at which the CBN sells the dollar to the BDCs is no longer tenable as the naira continues to appreciate against the dollar at the parallel market.
Unless the CBN takes immediate steps to adjust the rates at the BDC sub sector, a critical arm of the foreign exchange market will be undermined with its attendant consequences for the economy. (NAN)
FBO/OSA/PIO