Central Bank of Nigeria, CBN, has said it would restart the auctioning of foreign exchange to bureau de change, BDC, operators once international flights resume.
Isaac Okorafor, the CBN director, Corporate Communications, said on Monday, August 17, 2020, that this was because BDCs’ customers are mainly international travellers.
CBN’s position followed calls on the apex bank to provide dollars to BDCs in order to halt the slide of the naira against the greenback on the parallel market.
“The customers of BDCs are largely travellers and when the federal government suspended international flights in order to contain the spread of the COVID-19, the BDCs requested that we grant them holidays as well.
“So, once the federal government or the Presidential Task Force, PTF, announces the resumption of international flights, we would resume forex sales to BDC,” Okorafor said.
Muhammad Sanusi, a former CBN governor and former Emir of Kano, had said the gap between the Nigerian Autonomous Foreign Exchange, NAFEX, and BDC rates could be traced to inadequate foreign exchange caused by funding.
He said funding BDC would move CBN towards unifying the exchange rates.
“I think what the bank is trying to do is bridge that gap and I think moves have been made in general in July that have brought CBN rate and NAFEX rates closer. But BDC rates remain an outlier. It is a small percentage of the market, but it does have an impact on speculation, which is why it is important to fund that market,” Sanusi had said.
While the naira closed at N386 to a dollar on the investors and exporters window, it fell to as low as N470 to a dollar on the parallel market.
Godwin Emefiele, the CBN governor, recently said the period of the COVID-19 lockdown showed that some of those dealing in the parallel market were those involved in illegal businesses.
He had said: “There is a global lockdown right now, particularly on travels and airlines are not flying. So, there shouldn’t be any demand for forex in that market.
“Notwithstanding the fact that airlines are not flying and there is a lockdown, you still find that some people are dealing in that market. So, we are not going to be talking about the unification of our exchange rate around rates for people who are dealing in corrupt practices.
“Everybody who wants to buy or sell forex is allowed to deal through our NAFEX market. That is the market that is recognised and that is why we are saying unification is going to be around the NAFEX.”