BDC Operators Count Losses As Dollar Crashes To N1,130

Bureau de Change operators in Nigeria are counting losses after the naira gained N770 between February 21 and April 9, 2024.

At the BDC segment of the Nigerian Foreign Exchange Market, the naira is trading at N1,130 as of April 9, 2024, from N1,235, which it sold on April 8.

Some sellers in Zone 4, Abuja, who spoke to THE WHISTLER, said they lost millions of naira after purchasing dollars at N1900.

The naira made a surprise recovery after trading as high as N1900 per dollar on February 21, 2024, when the apex bank began a clampdown on street trading by BDCs.

The Central Bank of Nigeria took its fight against speculating on the naira by raising the capital requirements of ‘Tier 1 BDC’ to N2bn and ‘Tier 2 BDC’ capital pegged at N500m.

The bank also resumed the sale of dollars to qualified operators.
In a circular dated February 27, 2024, with reference number TED/DIR/CON/GOM/001/066, signed by CBN’s Director, Trade & Exchange Department, Dr Hassan Mahmud the CBN.

The bank banned beneficiaries from selling above one per cent of the purchase price.

The naira began a gradual recovery when the CBN withdrew the operating licences of 4,173 Bureaux De Change operators over failure to make rendition of returns in line with the Guidelines as well as failure to comply with guidelines, directives and circulars of the CBN, particularly Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT)and Counter-Proliferation Financing (CPF) regulations.

The CBN further crashed the price with another circular referenced TED/DIR/CON/GOM/001/072, saying it would be selling $10,000 to qualified BDC operators at the rate of N1,251 per dollar.

The BDCs were prohibited from selling the dollar for more than 1.5 per cent of the purchase price.

On April 8, the bank announced another tranche of intervention and pegged the dollar at N1,101 and warned beneficiaries not to sell above 1.5 per cent of purchase price.

The development has unsettled BDC operators who have old stock of foreign exchange bought at higher rates.

Ahmed told THE WHISTLER that he was badly affected adding “I purchased a dollar yesterday before the announcement by CBN that it will sell at N1,101/$. I bought it at N1,230 and now I have made a huge loss.

“Between February to date, I have lost more than N5m.”

Umar is another BDC seller who lost millions as a result of the naira rebound.

Umar said, “You won’t believe how hard I have been affected. When the naira traded around N1,800 and N1,900, I bought from sellers only for it to crash. Just the other day, CBN gave us N1,251 as the rate and we bought and sold at that rate they specified only for them to crash it to N1,101.

“Now, I still have the old stock. After the announcement, the dollar fell to N1,220 and later N1,200 on Monday, (April 8). Today, the naira is N1,130. I have lost millions since February.”

Mallam Aminu, another BDC operator, narrated to THE WHISTLER how his friend bought $30,000 at the rate of N1,800 back in February.

“My friend bought $30,000 at N1,800. This was around February when the rate was very high, only for it to crash to N1,400. He was hoping that it would rise again until the CBN further crashed it to N1,300.

“When you do the maths, he lost over N15m. A lot of us are very worried.”