BDCs appeal to CBN for forex increase to $50,000

The Association of Bureau De Change of Nigeria (ABCON)  has appealed to the Central Bank of Nigeria (CBN) for an increase in weekly sale of foreign exchange from $15,000 to $50,000.

This is contained in statement made available to the News Agency of Nigeria (NAN) in Lagos on Sunday.

ABCON also urged the CBN to extend its occasional intervention in the foreign exchange market to it to reduce demand pressure at the retail end of the market.

The association regretted that $15,000 (about N2.5 million) weekly sale to each Bureau De Change (BDC) by the CBN was inadequate to cover operating costs.

The CBN set $15,000 as deposit for weekly purchase of foreign exchange to BDCs, in June 2014.

The BDCs were also compelled to deposit N35 million mandatory caution to CBN. More than 2,000 operators have already complied with it.

The association said: “The difficulties that BDCs are currently facing are enormous due to the volume of the weekly sales granted to BDCs as against the associated costs in the business.

“We are strongly suggesting that the CBN should consider increasing the weekly sales to BDCs from $15,000 to $50,000.

“Given the increasing demand of dollars as against the rigidity of the weekly official sales to BDCs, we have noted that our members hardly meet up their demands from end-users.”

It urged the Central Bank to consider a periodic sale intervention to BDCs as done to banks.

According to the statement, this will help to achieve exchange rate stability in the event of increase in demand of dollar and static sale of $15, 000 to BDCs.

It said that on Sept. 24, the CBN sold a total of N350 million to banks through the Retail Dutch Auction System (RDAS).

It also said that the CBN sold N500 million and N400 million worth of RDAS on Sept. 29 and Oct. 8, respectively to banks, making a total of $1.250 billion within a period of 13 days.

The association also appealed to the apex bank to reduce the mandatory caution deposit by each BDC from N35 million to N15 million, to free up cash for BDCs to meet day-to-day operations.

“After the deadline for the payment of the increased caution fee of N35 million, we noticed that some BDCs could not conveniently carry out their weekly trading due to lack of cash.

“To avoid the possibility of such BDCs closing shop after their efforts to pay the caution fees, we are sincerely pleading to the CBN to review the caution fee.

“This can be from N35 million to N15 million in order to financially empower BDCs to carry on with their weekly trading,” it said.