Speculators Will Lose Billions On Forex Sales Resumption, Says ABCON
The Association of Bureau De Change Operators of Nigeria has said that currency speculators will lose huge funds as the Central Bank of Nigeria plans to resume dollar sales to over 5,000 Bureau De Change operators across major cities nationwide.
A report by ABCON stated that the naira was facing its greatest risk from the coronavirus pandemic as currency speculators continued to make spurious demand for dollar with hope to make good returns from the rising gaps between official and parallel market rates.
It noted that the CBN and ABCON had estimated losses of over N10bn for speculators in the next few months as the CBN prepared to commence forex sales to the BDCs.
The report said, “Like in 2016 currency crisis, the market got a major relief after the BDCs’ began getting dollar allocations from the CBN.
“That same scenario will soon play out as the CBN team and ABCON management begin to count days for the BDCs return to the market.
“The CBN has come to realise that BDC operators can be the difference between naira recovery and depreciation during volatile and uncertain times.
“That is especially true now that the local currency has come under intense pressure that is purely driven by speculative demand for the dollar.
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“The BDCs are essentially operators that help get dollars to the end users no matter where they are and have for decades proved their relevance in stabilising the naira.”
The President, ABCON, Alhaji Aminu Gwadabe, said the CBN-licenced BDCs would soon start full operations as the apex bank would soon reopen dollar sales to operators.
According to him, with the CBN’s planned lifting of moratorium on dollar sales to BDCs, reopening of the airports for air travels, global ease on restriction of movement are positive indications that dollar flows to the economy would soon improve.
He said the naira had been exchanging at N461 to dollar at the parallel market but would be upbeat once dollar sales to BDCs commenced.
Gwadabe said, “The return of over 5,000 BDCs to the forex market will add great strength to the naira and lead to major capital losses for forex speculators.
“It happened in 2016 and will happen again in 2020. The return of the BDCs will immediately boost naira recovery and put the enemies of the economy to shame.
“We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable.”
Gwadabe said the return of BDCs to the forex market would help chase away speculators, curb rising inflation, boost productivity and employment and enhance price discovery, market transparency and competitiveness.
The report noted that aside positive developments in the global economy, the CBN had taken action to address the risks facing the naira, which would lead to rapid recovery for the local currency.
The Director, Corporate Communications, CBN, Isaac Okorafor, had stated, “The CBN has 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.”
After the partial resumption of forex sales, the CBN said it was providing over $100m per week for school fees and the SMEs.