The President of the Association of Bureau de Change Operators of Nigeria, Aminu Gwadebe, has said that only a few banks have complied with the directive of the Central Bank of Nigeria to sell dollars to BDCs.
Gwadebe said this in an exclusive chat with The PUNCH as he analysed the positive performance of the naira in the parallel market in the past week.
Last December, the CBN granted temporary access to Bureau de Change operators to purchase foreign exchange from the Nigerian Foreign Exchange Market. In February, that access was extended till May 30, 2025. Later, the apex bank restricted the BDCs to purchase a maximum of $25,000 per week from a single authorised dealer bank.
The ABCON boss said the directive had helped with liquidity in the retail end of the market. However, he noted that only a few banks were selling to BDCs.
He said, “Just the announcement has helped even though not all the banks have started selling. Not more than three or four banks, as we speak, have started selling to Bureaux de Change. Now, imagine all the banks in Nigeria are calling BDCs to offer them their interbank proceeds. What could have happened?”
Gwadebe, who said that the naira strengthened by about N100 to 1,552/$ from 1,660/$ in the previous week, opined that one of the challenges facing the naira was psychological.
He said, “The market’s volatility is mostly psychological. The naira is not strong just because of demand and supply. Still, we have seen a lot of uncertainty from both the government and private individuals putting pressure on the market, whereby everyone wants to substitute the naira for dollars. Due to this development, people are bringing out dollars to look for naira. The mop-up policy of the central bank indicates that there is not much liquidity in naira to pursue the dollar for frivolous demands.
Idle naira in banks’ vaults creates an urge for hoarding and speculation. I’m sure with so many measures that the CBN is putting in place to ensure that there is no idle naira, especially for the banks to even start thinking of speculating.”
Gwadebe reiterated that the CBN needs to maintain liquidity in the retail end of the market, saying, “What CBN needs to do is ensure that there is liquidity, especially in the retail end of the market, and how will they do it? For instance, now that they said that the banks should sell foreign exchange to the BDCs, let them have the prudential target, say 20 per or 50 per cent of diaspora remittance should be BDC window by the banks. Once that is done, the CBN will be able to ensure that there is constant liquidity at the retail end of the market, and once there is that liquidity, you will see the naira getting stronger.
“It is a question of monetary oversight. It is a question of ensuring every participant is doing what it is supposed to do. The rules are there, but proper implementation of those policies is key.”
He maintained that making the BDCs one of the most effective transmission mechanism tools of the central bank’s foreign exchange policy has also proven to be effective.
