CBN’s Inconsistent Dollar Supply Hindering Naira Recovery, Say BDC Operators

The inconsistent allocation of dollars by the Central Bank of Nigeria (CBN) to Bureau De Change (BDC) operators is impeding the recovery of the naira, according to currency traders.

Operators argue that the irregularity in dollar distribution is eroding customer confidence in the foreign exchange (forex) market, leading to increased pressure on the parallel market.

The BDC operators have called for more frequent CBN interventions, suggesting that the dollar sales should occur at least once or twice a week to stabilize the market.

On July 18, 2024, the CBN initiated the sale of $20,000 to each BDC operator at a rate of N1,450 per dollar. This move was part of the bank’s strategy to alleviate forex scarcity, particularly in the retail sector, and to bolster the naira. However, despite this intervention, the exchange rate remains high and volatile, with the dollar trading at N1,590 on the parallel market.

Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), highlighted that the lack of consistent dollar sales has contributed to ongoing market volatility, intensifying demand pressure and further weakening the naira.

“The problem is the streamlining; it happened only once on July 18th. It’s been about three weeks now, and no further sales have occurred,” Gwadebe said.

He further suggested that the CBN should consider selling dollars to currency traders every week. “There was a time when we were collecting three times a week. We are advocating for at least twice a week. Even once a week would help, provided it’s consistent and in line with a clear cut-off time. This would ensure that liquidity enters the market simultaneously, encouraging more participation. However, if traders are unsure when the next allocation will happen, they will be hesitant to engage in the market,” Gwadebe added.