12 December 2015, Abuja – Just like it did last Wednesday, the Central Bank of Nigeria, CBN, has shut out Bureaux De Change, BDC, from its weekly dollar sales on the grounds that they did not comply with documentation requirements.
Forex dealers said the development led to a scarcity of the greenback and the subsequent depreciation of the local currency in the parallel market. The naira fell 2 per cent to a low of N251 to the dollar from the N249 it traded at the previous day. According to dealers, the apex bank sold $30.5 million to 1,017 BDC operators, excluding around 1,801 others.
Wednesday’s sale was lower from the $84.5 million it offered two weeks ago. A Lagos-based BDC operator, who spoke on condition of anonymity, told the New Telegraph that the regulator sold dollars to 670 out of about 1800 based in the state. According to him, the reduced supplies of dollars to BDCs resultedin a sharp increase in demand for the United States currency and the consequent depreciation of the naira.
He said, “Although I am happy that my firm was among those that the CBN sold dollars to,but at the same time it is very hard for us to meet the high demand for dollars in the market now. Already, I have exhausted the stock of dollars that I bought and many of my customers are still calling me asking for more.”
The BDC operator said that dealers were not clear about the criteria that the CBN was using to determine firms that are eligible to buy forex and those that are not, adding that the apex bank should increase dollar supply to the market to prevent the naira from sliding further. He disclosed that travelers were currently passing through a tough time as they were finding it difficult procuring foreign exchange for Personal Travel Allowance, PTA, and Business Travel Allowance, BTA.
Reacting to the CBN’s decision not to sell dollars to BDCs that failed to submit complete documentation last week, the acting President of the Association of Bureaux De Change Operators of Nigeria, ABCON, Alhaji Aminu Gwadabe, predicted that the naira would weaken further weaken unless the CBN relaxes its tough stance.
Financial analysts point out that most BDCs have not been able to comply with the CBN’s directive last month to include the Bank Verification Numbers, BVN, of forex end users in the returns that they are required to submit to the regulator. ABCON’s boss, Gwadabe, had at a recent press briefing appealed to the CBN to increase the level of awareness on the BVN policy.
He stressed that the main challenge of implementing the BVN as a criterion for foreign exchange transactions at the BDC segment was ignorance on the part of customers. He said, “Though the BVN policy applies to both banks and BDCs, the reality is that, an individual would willingly supply his or her BVN to a bank, and be reluctant to do so to a BDC, except, he has been adequately informed that it is a CBN policy.”