As Naira depreciates further in the parallel market
Bureau de Change, BDC, operators have been surviving by several options since they were banned from the Central Bank of Nigeria, CBN, supply of foreign exchange, Forex, a little over one month ago.
A group of financial market observers at the United Capital Plc, have made an inquest into the activities of the BDCs since the ban and these are some of their findings.
‘‘Following the Central Bank of Nigeria’s (CBN) decision to halt sale of Foreign Exchange (FX) to Bureau De Change (BDCs) operators, many of them have suffered for volumes and had to seek alternative sources to get FX supply. Survey of anecdotal sources revealed that BDCs do not solely depend on the CBN but have sourced for FX through the peer-to-peer transactions to fund their supplies.
‘‘The recent ban has forced them to amplify their reliance on sourcing FX via these sources. For example, BDCs take advantage of the limit on domiciliary account balances as well as transfer limits to facilitate international cash receipts and payments.
‘‘Also, many of them have moved to solidify relationships with high volume customers which has required them to raise their bid quotes as they compete for these volumes. This has forced them to raise their offer quotes.
‘‘Unsurprisingly, on Tuesday last week, the parallel market rate jumped to N527/$1, the highest in four years.
However, a more interesting loophole has been identified with BDCs relying on using customers to buy Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) from their banks.
‘‘The customers use fake visas in conjunction with already purchased travel tickets to buy FX from banks before going on to cancel the tickets.
‘‘The dollars are then sold to the BDCs at cheaper rates giving them the opportunity to sustain exorbitant margins earned on their FX transactions.
‘‘In response, the Central Bank has directed all commercial banks to publish on their websites the names and Bank Verification Numbers (BVN) of customers who are engaged in this act.
Clearly, the CBN continues to struggle to block the loopholes in the FX market while its ability to supply the needed FX for the entire economy remains very limited.
‘‘The move to restrict supply for certain import needs as well as other rationing and restrictive policies have only created further loopholes.
‘‘Overall, we think the way forward is the creation of a freer FX market which will encourage improved FX supplies as well as allow all parties within the ecosystem operate with greater transparency.’’
Meanwhile, findings by Vanguard Money Digest last weekend shows that the exchange rate in the parallel market has seen Naira further depreciating to N530/$1.
As Naira depreciates further in the parallel market
Meanwhile, findings by Vanguard MoneyDigest last weekend shows that the exchange rate in the parallel market has seen Naira further depreciating to N530/$1.
This is one of the statement I dislike as headline on Nigerian business and economy , every day by day it keeps depreciating as against dollar, pounds and euro, why.....
Despite all the Federal agencies in control of monetary regulations and policy implementation for the economy, cbn among others were all a failure, we need new adoption for best practices of economy from the developed countries with stable economy
‘‘The recent ban has forced them to amplify their reliance on sourcing FX via these sources. For example, BDCs take advantage of the limit on domiciliary account balances as well as transfer limits to facilitate international cash receipts and payments.
I trust my naija people, they will always find an alternative to making it in live, actually this issue of account balance limit and transfer limit bin dey give me headache, one thing I would have just advise the government is to free every individuals on a decentralized mode of operation, this will ensure no scarcity, no hoarding, and one can easily speculate on their preferred respective prices for commodity purchase, this is as simple as going to garage to board a bus or waiting at the road site for a free ride or cheaper one but either of the two your mission to travel is accomplished.
Wise up naija govt.
