The current crash in the naira is raising doubts about the exclusion of Bureau De Change operators from the investors’ and Exporters’ foreign exchange window.
As of the close of trade on Friday, the naira closed N777.8 at the I&E Window, While CBN weighted average closed N770.
Black market sellers are exchanging the currency at N870 per dollar. On Thursday, the naira exchanged at N888 per dollar on Binance FX trading platform.
Advertisement
The gap between the parallel market rate and the I&E window still leaves a margin between N92.2 and N110.
BDC operators who spoke to THE WHISTLER attributed the rise to demand pressure. The margin is the highest since the CBN unified the FX windows.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf expressed concern on the depreciation of the currency and the further widening of the gap between rates traded by BDCs and the I&E window.
Yusuf said, “BDCs have been complaining that they should be allowed to operate at the I&E window. For retail transactions, they should be allowed because right now I think they allow all FX transactions to go through the I&E window. BDCs deal with retail users of FX. They deal with smaller people.
“So, rather than allow every small people to go to the I&E, they can aggregate all these small demands and go on behalf of their customers to the I&E window rather than allowing people with retail transactions to flood the I&E window.”
On June 14, 2023, the CBN announced operational changes in the foreign exchange market. The apex bank abolished all segments of the FX market and collapsed it into the I&E window.
The CBN re-introduced the ‘willing buy, willing seller’ model at the I&E window signaling the floating of the currency.
“All eligible transactions are permitted to access foreign exchange at this window (I&E),” CBN insisted.
This clause excludes BDCs from participating in the window. This has been a base for debate as even the BDCs have protested through their national president, Aminu Gwadabe.
Recall that the BDCs prior to their ban in 2021 received weekly intervention from the CBN which they were accused by the suspended Central Bank Governor, Godwin Emefiele of ‘abusing the process’.
Before the ban, BDCs got $20,000 weekly allocations to over 5,500 of them totaling $110 million per week.
The new policy still maintains the stance by excluding ineligible items from accessing FX from the I&E window, including the BDCs.
The CPPE Boss said, “The government can define its own threshold because they are dealing with the retail end of the economy just like you have microfinance banks.
“They can also be allowed in the place to take care of small demands so that the system is not crowded with all these small FX requirements.”