Why CBN Must Resume Sale Of Dollar To BDCs As Foreign Exchange Pressure Peaks, according to the Founder of Agusto & Co Limited.
In order to reduce the pressure in the foreign exchange market, the Central Bank of Nigeria (CBN) should resume the sale of dollars to licensed Burea De Change operators.
Brand News Day Nigeria reports that the Founder of Agusto & Co Limited, Mr Bode Agusto during a webinar titled, “Nigeria in 2022- Will 2022 Be a Year of Strong Growth Driven by Herd Immunity from COVID-19?”
He also projected that if the CBN maintains its current stands not to sell dollars directly to the Bureau De Change (BDC) operators, the Naira to exchange rate would depreciate to N620/$1 in the parallel market before the end of 2022.
The Naira would continue to suffer in the parrel market if additional liquidity is not brought into the market through the BDCs. He said, “We see continued pressure on the parallel market exchange rates.
And the only way to reduce pressure in the parallel market is to throw money thereby selling dollars to the BDCs. If there is no additional funding to the BDCs from the CBN then the parallel market rate will be between N610 and N620 in 2022. It will be fueled by scarcity and the difference between inflation rates of the dollar and the Naira.”
Why CBN Must Resume Sale Of Dollar To BDCs As FX Pressure Peaks
He also predicted that the much-anticipated rate convergence in the foreign exchange market would take longer than expected since the central bank would be hell-bent on pegging the official rate.
He stated that convergence would make Nigeria have a single exchange rate, where the parallel market premium is less than 3.0% of the official rate.
According to Agusto Founder: ”He also complained about the neglect of the growing Nigerian debts. Agusto said, “The federal government says ‘we don’t have a debt problem and that we have a revenue problem.’ But I disagree completely. We have a debt problem that we are not taking very seriously. We are taking it lightly.”
What you should know about the CBN BDC ban
- At the Monetary Policy Committee (MPC) meeting on Tuesday, July 27, 2021, the Central Bank of Nigeria hit the Bureau De Change (BDC) for illegal forex trading and stated that it will henceforth discontinue the sale of forex to the Bureau operators in Nigeria.
- The CBN Governor, Godwin Emefiele, also announced a halt on the licensing of new Bureau De Change (BDC) operators and further processing of BDC applications for forex across the country.
- The CBN had directed Deposit Money Banks (DMBs) to set up teller points in designated branches for the sale of foreign exchange to meet legitimate forex requests of their customers.