Market News

Although the value of the naira has been appreciating, with the gap between the official and parallel market rates narrowing significantly in recent days, Bureau de Change operators say they are yet to gain practical access to the official foreign exchange window announced by the Central Bank of Nigeria.

This is as the value of the naira continues to appreciate recording almost seven per cent gain in about two weeks at both the official and parallel ends of the market reaching one of the strongest levels of the past two years.

At the parallel market, the value of the naira had appreciated to N1,340 to the dollar on Thursday as against N1,440 which it sold earlier in the week. It had also seen appreciation at the official market selling at N1,338 to the dollar, compared to to N1,347 which it was on Monday.

The apex bank had earlier announced that licensed BDCs could access forex through any authorised dealer at the prevailing exchange rate, permitting each BDC to purchase up to 150,000 dollars weekly, subject to Know Your Customer requirements and due diligence checks.

However, operators who spoke to LEADERSHIP said the policy remains largely on paper, as no transaction has been consummated under the new arrangement. “They just issued the circular. Till now, no BDC has bought from that market yet,” a BDC operator, who craved anonymity disclosed., saying “there is still some clarity needed.”

According to the operator, the circular stipulates that disbursement will be done through settlement accounts, a move that has raised operational concerns among operators. “The circular stated that disbursement will be through settlement account. So this settlement account, assuming it is dom (domiciliary account) to dom, I don’t think there is any platform in Nigeria today that will enable me to transfer from my dom account in First Bank to a dom account in another bank that is seamless, online, spot, real time,” he said.

He noted that while banks appear willing to support the initiative, many are still putting internal structures in place to comply with the directive. “The banks are willing. Most of them are putting their own structures in place to ensure that they support the CBN policy. Because the circular said we access the market but through the bank platform,” he explained.

He pointed out that the CBN’s decision to allow BDCs to route bids through their banks could ease entry barriers. “To make it easier, the CBN said you can go to your bank, give them bid order, so that the bank can go to that market on your behalf and buy for you. That, for a start, considering the nature of the bureau de change, should help the BDCs to go around the market and participate.”

Despite the teething challenges, he maintained that BDCs remain a critical transmission channel for exchange rate management. “If they can buckle up and put all the infrastructure and guidelines in place, people will see that the BDC has been the most important tool of the central bank foreign exchange transmission mechanism policy. Anytime they want to make an impact around the bureau de change, you find that the rates appreciate,” he said.

According to him, improved access for BDCs could also curb the dominance of informal and online traders who thrive on speed and minimal documentation. “It will checkmate all these online traders because most parents and students don’t patronise the official market. They don’t want the stress. It is stressful, bring this, bring that. The online market is liquid, instant, fast, everywhere. They pay higher,” he noted.