The Nigerian Naira fell significantly against the U.S. dollar at the parallel market on Wednesday noon, a day after the Central Bank of Nigeria (CBN) said it would no longer sell forex to Bureau De Change operators.
Data from currency exchange monitoring website, abokifx.com show that the Naira traded today at N522 to a dollar at the parallel market segment up from N505/$1 which the market opened with.
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The CBN governor, Godwin Emefiele, had announced Tuesday that it has stopped the sales of forex to Bureau De Change operators.
He explained that the parallel market operations had become a conduit for illicit forex flows and graft.
Mr Emefiele who stated this during a live TV broadcast while announcing that the bank has retained its benchmark policy rate, emphasised that weekly sales of foreign exchange by the CBN will henceforth go directly to commercial banks, and that the CBN will also call off the processing of applications for for BDC licences in the country.
An economist, Prof. Akpan Ekpo, has commended the Central Bank of Nigeria (CBN) for discontinuing sale of forex to Bureau de Change (BDC) operators in Nigeria.
Ekpo, a former Director General of the West African Institute for Financial and Economic Management (WAIFEM), made the commendation in an interview with the News Agency of Nigeria (NAN) on Wednesday in Lagos.
According to him, for BDC operators to obtain forex from CBN at official rate and then sell to those who need forex was unnecessary.
“The decision to discontinue sale of forex to BDC operators is a welcome development, they should never have become major players in the market.
“Nigeria is one of the few countries in Sub-Sahara Africa in which the Central Bank sells forex to BDC operators.
“We argued for years that the practice should cease but we were labeled radicals.
“BDC operators should source for their forex and engage in buying and selling of foreign currencies,” he said.
Ekpo advised them to strive to bring more forex from legal sources to the economy adding that the impact on the economy would depend on the quantum of forex in the economy.
On the other hand, a past President of the Chattered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, has urged the Central Bank of Nigeria (CBN) to exercise caution.
He said that the ban would create some challenges in the market as commercial banks might not be able to meet the forex demands of importers.
According to Unegbu, commercial banks themselves are not perfect, as some of them also flout forex regulations.
“This punitive measure by the CBN can negatively affect the forex trading market.
“Most businessmen, when they cannot access forex from commercial banks, rush to the BDCs.
“Banks are not perfect, they also bend the rule sometimes, but that of the BDCs became so obvious due to their large numbers.
“The Naira has been so bastardised and it is good to see that the CBN is acting to remedy the situation,’’ he said.
Unegbu said that athough some of the BDCs were involved in unwholesome practice there were still some BDCs that operated above board.
He said that the move by the apex bank was only a step toward resolving the abuse in the forex market and to reduce pressure on the Naira.
“There had been a lot of misgivings about forex in the country but this blanket ban by the CBN is just a step towards the solution.
“Not all the BDCs are bad, but as it is now CBN has banned both the good and the bad.
