ABCON to CBN: Reduce FX rate so our members can bid for more dollars

The Association of Bureaux De Change Operators of Nigeria (ABCON) has urged the Central Bank of Nigeria (CBN) to reduce its applicable buying exchange rate downward due to naira’s speedy recovery.

ABCON said the N1,251/$ applicable buying exchange rate CBN pegged for bureau de change (BDC) operators would result in losses for its members, as the open market rate stands at N1,235/$.

The association disclosed this in a letter signed by Aminu Gwadabe, ABCON president, to the CBN director, trade and exchange department.

On March 25, CBN had announced the second tranche of sales of foreign exchange (FX) to BDC operators at the rate of N1,251/$.

ABCON said this is the first time CBN’s applicable buying exchange rate for the CBN will be higher than the open market rate.

“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5% are yet to receive their disbursement. This is happening in the face of prevailing open market rate of N1,235/$ which is lower than the authorised applicable exchange rate by the CBN to the BDCs,” the group said.

ABCON said it forecast naira will continue to appreciate further across FX markets with the increasing sources of foreign exchange inflows aided by CBN policies.

Also, the association said its forecasts in the ongoing market development indicate a willingness of the market to correct itself with realistic price discovery.

“It is in view of the above market developments that we write to appeal to your good selves for a readjustments and review downwards of our funding rate of the last tranche (2nd bidding) from N1,251/$ further down to reflect current market rate discovery,” ABCON said.

“This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions.”

REVIEW PAYMENT PROCESS

ABCON also requested a review of the process of payments at the various disbursement centres to medium-time automation to achieve enhanced timely payments due to the spot nature of the group’s transactions.

The group further requested “that based on the offer and acceptance rule, the approval of refunds to those that are yet to collect disbursement having funded their accounts as it is the market that determines the rate presently be considered going forward”.

ABCON also said the current open-ended system for payments and collection of bids does not make for effective administration and control of the process and requested CBN introduce a cut-off time for payments and collection of bids.

“Consequently, many of our members are jittery to bid/collect their bid for fear of losing money as the current market reality has the potential to force us to sell below cost price and antithetical to recent market price discovery,” the group said.

The association said a quick and decisive response from the CBN can address the disturbing exchange rate disparity.

ABCON said this will enhance BDC operators’ participation in the bidding process and improve their confidence in the ongoing intervention by the CBN.