Currency Dealers Face Forex Losses as CBN Reduces BDC Rate to N1,117.5/$

“Currency dealers are facing challenges due to the increasing value of the Naira against the Dollar. The Central Bank of Nigeria (CBN) reduced the exchange rate for Bureaux de Change (BDC) to N1,117.5 per dollar, leading to losses for dealers.

The CBN also banned using foreign currency as collateral for Naira loans, except for specific cases like Federal Government Eurobonds. This move aims to control the use of foreign currency in local transactions.

The Naira’s value rose in both official and parallel markets, reaching N1,230.61 per dollar in the official market and N1,200 per dollar in the parallel market. The CBN plans to sell $10,000 to BDCs at N1,101 per dollar for eligible transactions.

Currency dealers expressed concerns about losses, with some BDCs buying dollars at higher rates before the CBN’s rate reduction. Customers are hesitant to buy, expecting further rate drops.Experts attribute the Naira’s appreciation to CBN policies and reduced incentives for forex malpractice. The ban on foreign currency collateral for Naira loans aims to stabilize the currency.

The Association of Bureaux De Change Operators (ABCON) is optimistic about the Naira’s stability, noting reduced incentives for illegal practices. The CBN’s measures have increased market efficiency and discouraged round-tripping and hoarding of foreign currency.

Overall, the Naira’s appreciation is seen as positive, driven by CBN policies and market confidence. The sustainability of this trend will depend on continued supply, government policies, and global factors.”