As Naira Hits N1,170/$1 All-time Low, BDC Operators Suggest Panacea

With the Naira  at an all-time low of N1,170 per dollar at the parallel market, on Friday, Bureaux De Change (BDCs) operators have said that achieving stable, strong and virile exchange rate in Nigeria would require their full participation in the retail segment of the forex exchange market, exchange rate stability

President, Association of Bureau De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe,  who presented a pathway to stable exchange rate yesterday in Lagos, said Nigeria, under the current leadership at the Central Bank of Nigeria (CBN), has all it takes to achieve a strong and stable exchange rate and build a highly liquid forex market that supports the domestic economy.

This is as the Naira weakened by 1.3 per cent yesterday compared to N1,155/$1 on Thursday.

Naira’s weakness followed strong demand for dollars by end users who could not meet their needs at the official market.

The naira has been in free-fall on the unofficial market, where it trades freely, which worsened after currency restrictions were lifted on the official market in June.

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At the official market, Naira on Thursday fell to a record low of N999 according data quoted by Reuters from Refinitiv, an LSEG (London Stock Exchange Group) business, and one of the world’s largest providers of financial markets data and infrastructure.

But data from the FMDQ showed that naira closed stronger than dollar, gaining 1.01 percent as the dollar was quoted at N782.68 on Thursday compared to N790.68 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the market trading segment for Investors’ Exporters’ and End-users that allows for foreign exchange (FX) trades to be made at exchange rates determined based on prevailing market circumstances.

During the FX auction on Thursday, willing buyers and willing sellers offered the highest bid of N986, weaker than N981/$1 on Wednesday and lower bid of N700/$1, data from the FMDQ indicated.

Continuing, Gwadabe said the  challenges confronting the nation’s forex market and depreciation of the naira require all hands to be on deck, and the BDCs, which are licensed to play at the retail end of the forex market, should be fully involved in providing lasting solutions to the ongoing volatility in the exchange rate.

Gwadabe said the continuous depreciation of the naira in both official and parallel markets does not benefit the BDCs and the domestic economy, hence steps should be taken to reverse the trend and strengthen the local currency for maximum impact on the economy.

The naira on Tuesday  crossed N1,100 to the dollar mark at the parallel market even as it continues to weaken considerably at the official market due to persistent dollar scarcity and speculative activities of illegal forex dealers.

He said the several measures by the apex bank to bridge exchange rate gaps showed genuine intentions of the regulator to entrench exchange rate stability, but getting the BDCs involved in the solution recipe will bring the desired results of not only a highly liquid market, but stable rates.

Gwadabe said that like every other segment of the market, the illiquidity in the market remains a major concern to the BDC sector.

He said aside illiquidity in the market, the ABCON is not happy with the unlicensed forex dealers who are at the centre of speculative activities, and attracting negative image to the sub-sector.

He said ABCON can only continue to educate the general public against patronising the illegal forex dealers because the suspension of the Self-Regulatory Organisation status of ABCON makes it difficult for the group to directly sanction the illegal operators.