Forex Sale To BDCs Will Reduce Currency Speculation- Expert

The Central Bank of Nigeria’s resumption of foreign exchange sales to the country’s Bureau de Change operators will reduce pressure in the foreign exchange market, the Chief Executive Officer, Cowry Assets Management Ltd, Johnson Chukwu, has said.

The expert gave his views on Tuesday on TVC News Business Nigeria, while assessing operations, scarcity and abuse in Nigeria’s foreign exchange market.

The CBN had announced the resumption of forex sales to BDC operators twice weekly beginning from August 31.

Chukwu said the expected resumption of dollar sales to the BDCs would help to inject liquidity into the economy.

According to him, the demand for foreign exchange had yet to reduce, adding that the country had been battling with concerns of naira slump at the parallel market which rose to N475 per dollar in August.

This follows the imbalance in the supply of dollar at the different windows of the foreign market.

The CBN had om March 25, suspended the sale of dollar to BDCs across the country citing the lockdown due to the Coronavirus pandemic.

The apex bank also collapsed the country’s multiple exchange rate, while it adopted a uniform rate between $376 to $380 per dollar.

The CBN also pegged the volume of sale for each market at $20 thousand per BDC.

Chukwu said, “If you go to the market and cannot access forex through the appropriate channels, the tendencies to go and bid for forex at the price that is beyond your own commercial rate is there.”

“Once the market begi9n to see liquidity come from the BDC window, it will calm the desperation we have in the market and that will put some moderation on the exchange rate”.

Chukwu explained further that with the CBN pledge to resume sales to the BDCs, bidders will not be willing to buy at any rate.