The Central Bank of Nigeria has been urged to modify and drop its relevant exchange rate below the N1,251/$ it set for its members by the Association of Bureaux De Change (BDC) Operators of Nigeria.

This was said in a letter from ABCON National President Aminu Gwadabe to the CBN Director of the Trade and Exchange Department.

The appeal arises when the BDCs’ relevant buying exchange rate of 1,251/$ (plus a 1.5% margin) is less than the parallel market rate of 1,235/$, as determined by the CBN in its most recent round of interventions.

Gwadabe lamented that the naira’s speedy recovery made CBN’s selling rate to BDCs very expensive and difficult to offload to retail end buyers, who were going to the undocumented forex operators for cheaper rates.

He further expressed concerns that many BDCs, who funded their accounts for dollar allocations, were yet to receive their allocation of dollars to meet the legitimate critical demand of their clients due to scrutinisation of the BDCs’ documents for collections at the various designated centres.

He noted that this had made the BDCs vulnerable to exchange rate risk and significant losses.

“We discovered a worrisome development where many of our members who paid for dollar allocations at N1,251/$ with a margin of 1.5 per cent are yet to receive their disbursement. This is happening in the face of the prevailing open market rate of N1,235/$, which is lower than the authorised applicable exchange rate by the CBN to the BDCs,” the letter said.

Despite this development, ABCON lauded the CBN leadership for the recall of BDCs into the official FX window and steps taken by the apex bank to strengthen the naira against the dollar and other global currencies.

ABCON president stated that the positive fallout of the CBN’s efforts to restore the naira’s glory came faster than expected, reiterating its commitment to working with the apex bank to realise the objectives of the government towards exchange rate stability and economic growth.

He added that ABCON’s forecasts in the ongoing market development indicated a willingness of the market to correct itself with realistic price discovery as the naira is forecast to continue to appreciate further across the market with the increasing sources of foreign exchange inflows aided by the CBN policies.

“It is in view of the above market developments that we write to appeal to your good selves for readjustments and review downwards of our funding rate of the last tranche (2nd bidding) from N1,251/$  further down to reflect current market rate discovery.

“This became imperative as it is only the consideration of the readjustment downward that will enable our members to upload their holding positions,” he noted.

The association also requested that the process of payments at the various disbursement centres be reviewed in the immediate time to a medium time automation to achieve enhanced timely payments while also observing the spot nature of transactions.

According to the group, the apex bank should introduce a cut-off time for payments and collection of bids, adding that the current open-ended system for payments and collection of bids does not make for effective administration and control of the process.

“Consequently, many of our members are jittery to bid/collect their bid for fear of losing money as the current market reality has the potential to force us to sell below cost price and antithetical to recent market price discovery,” it elucidated.

ABCON insisted that the disturbing exchange rate disparity could be addressed by a quick and decisive response of the apex bank, which would go a long way in bolstering BDC operators’ confidence in the ongoing intervention by the Central Bank of Nigeria as well as enhance their participation in the bidding process.