{"id":84113,"date":"2021-07-28T14:27:21","date_gmt":"2021-07-28T13:27:21","guid":{"rendered":"http:\/\/pointblanknews.com\/pbn\/?p=84113"},"modified":"2021-07-28T14:27:21","modified_gmt":"2021-07-28T13:27:21","slug":"naira-slides-to-505-as-cbn-stops-forex-sale-to-bdcs","status":"publish","type":"post","link":"https:\/\/pointblanknews.com\/pbn\/news\/naira-slides-to-505-as-cbn-stops-forex-sale-to-bdcs\/","title":{"rendered":"Naira slides to 505\/$ as CBN stops forex sale to BDCs\u00a0"},"content":{"rendered":"
The naira fell slightly to the dollar at the parallel market few hours after the Central Bank of Nigeria on Tuesday announced the discontinuity of forex supplies to the Bureau de Change Operators in the country.<\/p>\n

The CBN Governor, Godwin Emefiele, announced the end of forex sales and new licence approval after the Monetary Policy Committee two-day meeting in Abuja on Tuesday.<\/p>\n

He expressed the MPC\u2019s disappointment over their continuous abuse of the privilege.<\/p>\n

At the end of the meeting, the MPC retained the lending rates and other parameters.<\/p>\n

Reading the MPC\u2019s decision, Emefiele said, \u201cBased on the above considerations, the MPC made the decision to hold all policy parameters constant; believing that a hold stance will enable the continued permeation of current policy measures in supporting the recorded growth recovery and macro-economic stability.<\/p>\n

\u201cThe committee thus decided by a unanimous vote to retain the Monetary Policy Rate at 11.5 per cent; retain the asymmetric corridor of +100\/-700 basis points around the MPR; retain the CRR at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent.\u201d<\/p>\n

Speaking on the decision to stop forex to the BDCs, Emefiele said the MPC noted with disappointment and great concerns that the BDCs had defeated their purpose of existence to provide forex to retail user, but instead, they had become wholesale and illegal dealers.<\/p>\n

He said, \u201cOperators in the BDC have not reciprocated the gesture to help maintain price stability in the market since the CBN had been selling forex to them.<\/p>\n

\u201cThey have remained renegade and so greedy, recalcitrant with abnormally high profit from these sales while ordinary Nigerians have been left to feel the pain and therefore suffer.<\/p>\n

\u201cGiven this rent seeking behaviour, it is not surprising that since the CBN began to sell forex to the BDCs, the number of operators has risen from mere 74 in 2005 to over 2,700 in 2016, and almost 5,500 BDCs as at today.<\/p>\n

\u201cIn addition, the CBN constantly receives nothing less than 500 new applications from BDC licences every month, and we therefore begin to wonder, what is in this business that everybody must be in it?\u201d<\/p>\n

The BDCs, he observed, had continued to make huge profits while Nigerians suffered in pain.<\/p>\n

He said the commercial banks would be monitored to provide forex for the legitimate use of Nigerians.<\/p>\n

\u201cThe Central Bank will henceforth discontinue the sale of forex to Bureau de Change operators,\u201d Emefiele said.<\/p>\n

Meanwhile, the naira fell slightly to the dollar few hours after the CBN\u2019s announcement.<\/p>\n

According to\u00a0naijabdcs.com<\/a>, the official websites of the BDCs, the naira which exchanged to the dollars at N503\/$ on Monday was bought and sold for N503 and N505 on Tuesday evening.<\/p>\n

The CBN had been supplying each licensed BDCs $10,000 twice per week at the rate of N393 with the instruction that they should sell with a margin of N2.<\/p>\n

When contacted to respond to the new development, the President, Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, replied an SMS, \u201cIn a meeting with BDCs operators. For now, no comment.\u201d<\/p>\n

Economist and former Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, said what was happening in the foreign exchange market was a consequence of the CBN\u2019s policy choice of a fixed exchange rate regime and administrative allocation of forex.<\/p>\n

He said, \u201cIt is a policy regime that has created a huge enterprise around foreign exchange \u2013 round tripping, speculation, over invoicing, capital flight etc.<\/p>\n

\u201cThe action of the apex bank amounts to tackling the symptoms rather than dealing with the causative factors, which is not a sustainable solution.<\/p>\n

\u201cIt is regrettable that the CBN does not believe in the market mechanism.\u00a0 Yet market systems are time tested as instruments of efficient resource allocation in leading economies around the world.\u201d<\/p><\/div>\n

\nHe added, \u201cMoving retail forex transactions from BDCs to the banks was like kicking the can down the road.\u00a0 The same issues would manifest even with the banks.\u201d<\/p>\n

According to him, the way out of the foreign exchange conundrum was for the CBN to allow the market to function.<\/p>\n

He said, \u201cThe CBN needs to give the market a chance.\u00a0 Its current approach would continue to deepen distortions in the economy, perpetuate round tripping, fuel speculation, suppress forex supply and boost underground economy.\u201d<\/p>\n

A past President, Association National Accountants of Nigeria, Dr Sam Nzekwe, said it was a good decision to stop forex allocation to the BDCs.<\/p>\n

He said, \u201cBDC is meant for light travellers, someone that is travelling and has no time to go to bank who can just stop over at the airport and buy few dollars and travel with it. The CBN was allocating forex to them which was a wrong decision and it is a terrible thing. That is why they encouraged round tripping.\u201d<\/p>\n

According to him, the BDCs need to source their monies themselves because they were doing illegal dealings with the privilege.<\/p>\n

The Chairman, Mutual Benefits Assurance Plc, Dr Akin Ogunbiyi, said that it was not appropriate to be allocating scarce forex to the BDCs.<\/p>\n

\u201cWhy will you allocate something that is so scare to a set of people. The way to solve forex problem is to have one single exchange rate so that anywhere you turn to this it is the same rate you get it, there will be some sanity.\u201d<\/p>\n

He said it was important to have a single conversion rate.<\/p>\n

Some financial experts warned on the possibility of further deprecation of the naira against the dollar following the CBN directive.<\/p>\n

<\/div>\n
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The naira fell slightly to the dollar at the parallel market few hours after the Central Bank of Nigeria on Tuesday announced the discontinuity of forex supplies to the Bureau…<\/p>\n","protected":false},"author":1,"featured_media":84114,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[5],"tags":[],"class_list":["post-84113","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"yoast_head":"\nNaira slides to 505\/$ as CBN stops forex sale to BDCs\u00a0 - Pointblank News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/pointblanknews.com\/pbn\/news\/naira-slides-to-505-as-cbn-stops-forex-sale-to-bdcs\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Naira slides to 505\/$ as CBN stops forex sale to BDCs\u00a0 - 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