Dollar crisis: BDC operators ‘fight’ CBN over costs, withdraw services

Recall that the apex bank had on Wednesday, January 31, 2024, unveiled new measures to help banks prevent foreign exchange (FX) losses due to the volatility of the FX market

However, less than 24 hours after the CBN directives, BDC operators in Abuja directed their members to withdraw their services in the FCT for two days with effect from Thursday to Friday.

The association’s task force was all out to ensure compliance and arrest BDC operators selling or buying forex yesterday.

Customers who were eager to buy or sell dollars were sent back by the union’s task force.

The move by the association is linked to the spike in the dollar, which closed around N1,520 at the BDC segment on Wednesday.

Although it is unclear if the two events are connected, a BDC trader, who confirmed the development, said they stopped working due to the free fall of the naira against the dollar.

It was also learnt that Abdulahi Dauran, the chairman of the Association of Bureau De Change, Abuja chapter, issued the directive to stop sales as the exchange rates in both the official and parallel markets have become unfavourable.

“Quite simply, we want to lower the price of the dollar across the entire national spectrum,” another trader said.

Despite the government efforts to increase liquidity in the FX market, the naira has continued to weaken to unprecedented lows against the greenback.

The local currency depreciated to N1,482 against the dollar at the official window, also known as the Nigerian Autonomous Foreign Exchange Market (NAFEM), on Tuesday.

The rate, for the second time in nine years, surpassed the value of the parallel market, which was quoted at N1,470 at the close of the market on the same day.

On Wednesday, the naira extended its poor performance, crossing the N1,500 mark at the parallel section of the FX market.

The value of the naira fell to N1,530 against the dollar- an all-time low in the black market.

Speaking on the issue, Aminu Gwadabe, the President of the Association of Bureaux De Change Operators of Nigeria (ABCON) said the suspension of service is not the position of his association.

Asked if the traders ceasing operations are not members of ABCON, he said, “Yes, we have our National Executive Council and it is only that central organ of the association that can issue such directive and as a professional association and complaints institution we believe in collaboration and engagements which is presently ongoing.

“We are professional and regulated institutions. But [are] continuing engagements with relevant agencies.”

Gwadabe stressed that many currency traders are not members of ABCON.

At the Nigerian Autonomous Foreign Exchange Market, the naira fell around N1,480, from the N900 which it was in December 2023.

“The dollar is on the rise today, and every Nigerian is blaming the BDC operators. They said we are responsible. So, we want to show our innocence using this action,” one of the operators said.

The dollar lost about a huge per cent of its value in 2023 after the Central Bank of Nigeria introduced a managed float.

The naira fell from around N720 per dollar at the BDC segment to over N1200 by the end of 2023.

The CBN blames speculators for the depreciation of the naira.

“We want to see if the naira will appreciate. But if the government cannot help the situation, then who are we as middlemen?

“So, we can’t guarantee the condition of the naira but we are not pleased with the way things are going,” a top official of the Wuse Bureau de Change Association (under the Abuja Bureau de Change Association) who was not authorised to speak told THE WHISTLER.

*Close shops in Abuja, Lagos, Kano

BDC operators in Lagos and Kano are also on shutdown over the foreign exchange crisis.

Another top official said, “We decided to take this action because we want to show the government our concern and that we have no hands in the rise in the dollar.”

On Wednesday, the CBN issued a riot act on foreign exchange market operations in Nigeria.

The apex bank issued a new circular on reporting foreign currency exposure to all banks to curb forex speculation and risk mitigation.

*Bank customers decry increasing hardship, reduced purchasing power

Bank customers resident in the Federal Capital Territory (FCT) have decried the continuous fall of the naira to the dollar.

According to them, their purchasing power has reduced drastically.

The News Agency of Nigeria (NAN) reports that one dollar to Naira exchange rate at the parallel market is between N1,440 and N1,500 while the official rate is N1,356.

Some of the customers who spoke with NAN yesterday in Abuja appealed to the government and the Central Bank of Nigeria (CBN) to urgently evolve measures to address the situation.

They also lamented that the situation had inflicted untold hardship and had reduced their standard of living, saying the development had also negatively affected all sectors of the economy.

Mrs Irene Igunmado, a bank customer with Access Bank, said the fall of the naira had reduced the purchasing power as the prices of goods and services had skyrocketed.

Igunmado also said that the increase in the prices of food items had made her family reduce their standard of living.

”Nobody tells anyone in Nigeria about the situation now. Even my little children understand that times are hard.

”This naira fall is worsening the situation because when you go to the market and ask traders why the prices of everything have increased, they will tell you it’s because of the dollar. Companies are closing down, and relocating to other places. This is not the ‘renewed hope’ that the present government promised us,” she said.

Mrs Victoria Emeka, a bank customer with Guaranty Trust Bank, said that although the food monthly allowances for her family had increased, it could not cater to their needs.

”Every month, my husband usually gives me N30,000 to buy food items that will last us for the month because I have a permanent list that I use.

”Now, although he has increased the amount to N60k the money will still not buy half of the things in the list which was usually purchased entirely with N30k. The government needs to do something urgently,” she said.

A bank customer with First Bank Plc, Mr Franklin Ogunleye, said the naira fall was the reason for the relocation of many Nigerians to other countries.

Ogunleye said he was feeling the heat of the naira fall as he was sending money to his family abroad, who just relocated recently and were yet to fully stabilise and get a job.

”This Naira fall is biting me so hard because my business is about to collapse. I relocated my family to the United Kingdom (UK) in 2023 and every month, I change money and send it to them.

”Sometimes, I change as much as two million naira but it will still not be enough for them because of the exchange rate. I am thinking seriously of leaving this country to join them so that I can reduce this untold hardship,” he said.

The CBN also warned lenders against hoarding excess foreign currencies for profit.