By Babajide Komolafe
IN a bid to encourage Nigerians in diaspora to use official channels to transfer earnings back home, the Central bank of Nigeria (CBN) yesterday raised the exchange rate for Bureaux De Change (BDC) to N385 per dollar.
Presently, the CBN allows Travelex and First Bank to sell proceeds of international money transfer services to BDCs. While each BDC is allowed to purchase $10,000 per week, the CBN however sets the exchange rate at which the dollars are sold to them.
Prior to yesterday, the CBN allows BDCs to buy at N375 per dollar and sell at N381 per dollar. But yesterday, the apex bank raised the rates, allowing BDCs to buy at N381 per dollar and sell at N385 per dollar.
Confirming this development to Vanguard yesterday, Acting President, Bureaux De Change Operators of Nigeria (ABCON) Alhaji Aminu Gwadabe said that the increase was to make the market more attractive to Nigerians in Diaspora. The CBN wants to encourage them to send their remittances through the official channels instead of using unofficial channels. The aim is to increase the supply of dollar and stabilise the exchange rate.
Vanguard investigation however revealed that the decision to increase the rate was communicated to the BDCs an hour after the apex bank had directed BDCs to submit bids at old exchange rate of N375 per dollar. According to Mr. Harrison Owoh, Chief Executive, HJ Trust BDC, most BDCs have already paid at the old exchange rate before the CBN announced the increase. “The implication is that bids of BDCs which cannot make the balance payment might be disqualified and this would lead to shortage in the supply of dollars into the market,” he said.
Meanwhile the naira appreciated at the interbank foreign exchange market in response to intervention by the CBN. The apex bank intervened by selling $1.5 million to stabilise the interbank exchange rate. Consequently, the naira gained N2.27 as the interbank exchange rate dropped to N305.5 from N307.77 last week.
Similarly, the naira appreciated at the parallel market as the exchange rate dropped to N455 per dollar from N460 last week due to increased supply via dollar sale by Travelex.
Meanwhile the scarcity of funds in the interbank money market aggravated yesterday sending cost of funds to 128 per cent. According to data published by Financial Dealers Market Quote (FMDQ), interest rate on Overnight borrowing among banks closed at 128.5 per cent while interest rate for Collateralised borrowing (Open Buy Back) closed at 125.5 per scent.