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Scarcity and shrinking liquidity in the forex market caused the dollar to exchange for N445 in the parallel market on Monday. The exchange rate was further compounded by the Federal Government's ban on flight operation in Nigeria, which prevented bureau de change operators to have access to forex.
Speaking on the impact of the COVID-19 pandemic measures on access to forex, the President of Association of Bureax De Change Operators of Nigeria, Aminu Gwadabe, said having to wait until flights resume operation has impacted the naira negatively.
He further explained that the scarcity of the dollar has led to the shutdown of the BDCs window, “The extension of airport lockdown as well as sale of forex to the BDCs pending when air travels resume has impacted the naira negatively from N425/$ to $445/$ in the parallel market.
“However, the assurances of the CBN governor to foreign investors on ease of exit have helped to flatten the curve at N445/$ without any sign of further depreciation at the close of business today." Gwadabe said, adding that, "The persistent dollar scarcity with shrinking liquidity in the market is one of the major unintended consequences of the shutdown of the BDCs window.” He told Punch.
CBN selling Forex to banks, not Bureau De Change Operators
Although, Nigerian banks have begun to make forex available to small and medium enterprises in need of essential imports necessary to rejuvenate the economy as businesses gradually resume across the country. Also, banks are selling forex to customers planning to pay school fees.
Commercial banks had commenced the forex sale after the Central Bank of Nigeria (CBN) began to sell forex to all Deposit Money Banks. The forex sale is part of measures by the financial sector to ease the impact of lockdown on households and businesses. The CBN disclosed that over $100 million is made available per week for school fees and the SMEs.
Speaking on the need to end the scarcity, the Bureau De Change Operators said CBN needs to resume the sale of forex to Bureax De Change to support naira's value and small industries in Nigeria. But the CBN, according to its Director, Corporate Communications, Isaac Okorafor, will only begin to sell forex to Bureau De Change Operators when international flight operation begins.
“The CBN has also made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels and other designated retail uses, as soon as international flights resume,” Okorafor said.
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