By Omodele Adigun
Association of Bureaux De Change Operators of Nigeria (ABCON) has advocated measures to curb the continued depreciation of the Naira.
The measures were contained in the ABCON Quarterly Economic Review for the 3rd quarter of the year (Q3’21).
ABCON noted that recent developments in the foreign exchange (forex) market have proved that the suspension of dollar sales to BDCs is not the solution to the continued depreciation of the Naira in the parallel market. It added that the continued depreciation of the Naira has also proved that BDCs are indispensable in Nigeria’s context of forex market.
To address the continued depreciation of the Naira in the parallel market, ABCON called on the Central Bank of Nigeria (CBN) to restructure the BDC sub-sector. It also called on the CBN to resume dollar sales to the public through BDCs especially in view of the failure of the intervention through Deposit Money Banks to bridge the gap between the official and parallel market exchange rate.
The Association stated: “Industrialists have reported increased scarcity of foreign exchange in the system since the stoppage of intervention to BDCs which is an indication that, irrespective of the anomaly observed in the operations of BDCs, part of the allocation to the sub sector flows into the real sector. Thus, it is logical to consider restructuring BDC operations to weed out the dysfunctional units and operators bringing out the real outfits for operational efficiency.These can be achieved through the design of a dynamic operational modalities of standard practices
“The refined outfits can effectively operate on independent transparent platforms dealing in autonomous funds in the economy. They should be permitted to operate as a fully independent foreign exchange professional under the best practices in international foreign exchange operations. Medium scale dealers in foreign exchange should be permitted to operate a lower platform to the Investors and Exporters (I&E) market under a transparent clearing house modalities.
“The market or platform will compete for funds in the global foreign exchange market thereby deriving a merger and stability in exchange rate in the economy. This is a basic solution to the divergent and multiple exchange rates regimes plaguing the Nigerian foreign exchange market for ages.”
ABCON also called on the CBN to investigate the actual causes of the depreciation since July 2 when it suspended dollar sales to BDCs and why the Deposit Money Banks were unable to bridge the gap of supplying foreign exchange to satisfy the demand earlier fulfilled by BDCs.
The Association stated: “Why are the Money Deposit Banks unable to bridge the gap of supplying foreign exchange to satisfy the demand earlier fulfilled by BDCs?”