Fakoyejo OlalekanOn Wednesday, the pound extended its value closer to N1000 exchange rate in the Bureau De Change window of the black market, selling above the dollar rate.
Prime Business Africa was told by Bureau De Change operators that they sold one pound between N880 to N920, which indicates interested buyers are charged a premium for the United Kingdom currency.
It was learnt that the Bureau De Change operators buy the pound from traders and individuals at the exchange rate between N850 to N890 as of December 28, 2022.
The pound exchanged at a much higher rate when compared to the dollar’s value, which was sold at a rate of N745 to N750 and bought from the public at the price of N725/$1 to N730/$1 in the black market.
Nigerians gaining, losing in the black market
This means that just like the dollar exchange rate, Nigerians are gaining and losing in the black market, as the Bureau De Change operators are buying and selling pound at a premium rate.
The black market has become a preferred alternative channel for businesses and individuals who are avoiding the scrutiny of the Central Bank of Nigeria (CBN), but this comes at a higher cost.
A check on the central bank website showed that as of December 21, the pound was bought at the official market at a rate of N540.04/£1 but sold at N541.25/£1.
This indicates Nigerians buy pounds at the black market at N200 more than the UK currency cost in the official market while trying to avoid CBN’s oversight, but they gain almost the same value if they buy from the official window and sell in the parallel market.
Concerns for BDC operators
Meanwhile, with the foreign exchange shortfall recorded in the official window, the parallel market has been witnessing demands overshooting supply. This is a course for concern, as the BDC source for forex from the public due to CBN forex sale ban.
The CBN had banned sales to BDC operators in July 2021, forcing BDC operators to seek forex independently.
President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, had stated that, “BDCs are licensed to provide retail FX services, including buying from the public and also selling to end-users for allowable transactions, namely personal travel allowance, business travel allowance, payment of medical and school fees.”
If demand continues to overshoot supply, the value of the pound and dollar will remain at a premium rate in the black market, as there will be little foreign exchange to go round or meet demands from the public.
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