According to The Nation, in order to complement the work of the CBN, the BDC operators, under the aegis of Association of Bureaux De Change Operators of Nigeria (ABCON), will today begin the implementation of the newly launched Uniform Weekly Exchange Rate for Licensed Bureaux De Change Portal.
The portal is being launched to promote exchange rate convergence and achieve uniform exchange rate for the naira against the greenback across all licensed BDCs. It was created with the understanding that the Foreign Exchange (forex) market is driven by information flow.
The positive information flow, it is believed, will translate to better pricing for the naira and improved investment sentiments among others. Having recognised these facts, the ABCON, the umbrella body for all CBN-licensed BDCs, last Tuesday, launched the Uniform Weekly Exchange Rate for Licensed Bureaux De Change Portal.
ABCON President Aminu Gwadabe, who launched the portal at a media forum in Lagos, said the technology will bring exchange rate convergence, eradicate currency speculation and ensure the naira’s speedy recovery against the dollar.
According to him, such feats are in line with CBN Governor Godwin Emefiele’s plan to stabilise the naira and boost investors’ confidence in the local economy. The CBN chief told BDCs at a meeting that he was looking at ways to boost dollar liquidity and eliminate the spread at the parallel market. The apex bank’s chief also promised not to devalue the naira again.
The decline in the prices of oil since mid-2014, cut government revenue and triggered currency controls that crippled industries and contributed to contraction of the nation’s economy.
Last June, the authorities removed a 15-month currency peg to attract inflow. Although the naira has plummeted almost 40 per cent since the unit was floated, traders said it is still being managed by the government. The rebound in oil prices has helped the country in boosting its forex reserves to $26.7 billion as of January 10.
According to Gwadabe, the BDCs Weekly Rate was launched to make it a reference point for realistic rates in the market that will boost foreign investment inflows, displacing the damaging effect of foreign media platform like Abokifx.com to the economy.
Gwadabe was confident that with the gradual recovery in crude oil prices, enhanced commitment of the CBN to economy diversification which has led to rising production of local rice and drop in import bills, as well as President Muhammadu Buhari’s political will to implement key economic reforms, the task of achieving a single determined exchange rate will be achieved.
He urged the media and general public to adopt a single rate in their reporting and forex dealings, and also always quote rate on the ABCON website- www.abcong.ng for consistency and uniformity of reporting. The ABCON chief reiterated the need for the public to deal with CBN-licensed BDCs only and urged the public to report errant operators for necessary sanction.
“ABCON wishes to reiterate its willingness to embark on a comprehensive media campaign on the roles, activities and location of members nation-wide so as to provide a guide to the public in dealing with only CBN-licensed BDCs and for the public to report any errant operator for necessary sanction”, he said.
Gwadabe informed that the CBN will impose between N500, 000 to N2 million fines on any BDC operator that violate regulatory policies and while such operators may also face license suspension. He called for public support for ABCON’s determination to highlight positive rates development in the market through the BDCs Weekly Rate for media coverage which was launched at the event.
“We also seek your support and partnership to assist the CBN and government to eliminate or reduce to the barest minimum, activities of parallel market operators. We also want to, through our partnership with you, give visibility to registered BDCs in the market and create more awareness on the role of operators in selling forex to the retail end of the market,” he stated.
The ABCON chief spoke of the need for the CBN and Federal Government to harmonise the multiple official exchange rates in the country and adopt a unified rate for transactions.
Calling for the adoption of a single forex market rate system, Gwadabe said that licensed BDCs will post an exchange rate every Monday on its website from January 16 to “highlight positive rate development in the market” and counter domains such as Abokifx.com, which publishes ‘high’ unofficial prices daily.
Trading in the parallel market became more regular since 2014 after the CBN strengthened capital controls as crude oil prices tumbled at the global market.
Dollar trades for about N490, compared with the official rate of about N315. Gwadabe, who said that the BDCs will initially quote a rate of N399/$, added that the parallel market rates will be disregarded as they were not recognised by law, raising the hope that exchange rate will continue to improve in the course of the year, despite the challenges being faced in the forex market.
The CBN, last week, confirmed the operating licenses of 3,147 BDCs that met its N35 million mandatory capital base. The reviewed list was the first since May 29, last year, when the apex bank approved 2,998 operators to meet customers’ forex needs at the retail-end of the market.
The CBN said the new approvals in BDCs were in line with its plan to deepen the forex market by getting more operators involved in the retail-end of the market.
Gwadabe said that the licensing of new BDCs was a positive development that is expected to deepen dollar liquidity in the system.
Disclosing that the apex bank has a mandate to review the list of operators on quarterly basis, Gwadabe added that the list grew to 2,998 from 1,400.
“There are more approvals expected. It is a welcome development,” he said.
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