Fakoyejo OlalekanThe foreign exchange (forex) rate between the Naira and the Dollar has increased by 47 per cent since the Central Bank of Nigeria (CBN) banned the sales of FX to the black market.
This represents N245 increase in the price offered by the Bureau De Change (BDC) operators for the sale of the Dollar to the public.
On 27 July 2021, the CBN announced that it has suspended the applications for and issuance of new licenses for BDC operations in the country effective July 29, 2021.
The suspension also included an embargo on the sale of foreign exchange to Bureau De Change operators. Prior to the ban, CBN sold $20,000 weekly each to 5,500 BDC operators.
Prime Business Africa gathered that the ban wiped off $110 million received weekly from BDC’s forex reserves, worsening the forex scarcity in the black market.
Amid the ban, the Dollar rate has increased from N525/$1 to between N740-N770 within two years in the black market, according to BDC operators that spoke with Prime Business Africa.
This means the value of the Naira depreciated by 47 per cent between July ending to the time of filing this report, defying the projection of the bankers’ committee after the CBN made the announcement.
At the time, the Chief Executive Officer of Guarantee Holdco (GTCo), Segun Agbaje, said: “You will soon be able to buy at N423 or N425 at most.”
In the official market, the Naira also depreciated by –12.4 per cent, as the price of the Dollar rose by N51.4 kobo to N463 as of 28 April 2023, against the N411.60 kobo Dollar traded the week CBN announced the FX ban on BDC operators.
Why did CBN ban forex sales to BDC?
The CBN accused the Bureau De Change of fueling illegal businesses with the forex obtained from the financial regulator and also taking advantage of forex buyers.
CBN said the BDC operators are making abnormally high profits and also facilitate unlawful financial transactions and other financial crimes.
“The Governor noted that BDCs had reneged on an earlier understanding to make marginal gains on FX sale allocations to them by the Bank and chosen the path of greed which left the average Nigerian reeling in unnecessary pain and avoidable agony while BDC promoters made abnormally high profit.
“He condemned the situation where BDCs, rather than work to achieve the laudable objectives for which they were licensed, had become facilitators of unlawful financial transactions and other financial crimes thereby promoting corruption in the system,” CBN wrote in its update.
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