The Flexible Exchange Rate Inter-bank Market policy is on trial, the Central Bank of Nigeria (CBN) said yesterday.

It will make room for more stakeholders, including bureaux de change (BDC) operators, to participate, CBN Governor Godwin Emefiele said.

He spoke at the interactive session between the BDCs and the CBN on the new policy and the state of the forex market.

He assured the BDCs that they will be factored in while acknowledging their impact on businesses.

The broad framework and guidelines of the Flexible Exchange Rate Inter-bank Market was released by the CBN on June 15 during which it restored the automatic adjustment mechanism of the exchange rate with the re-introduction of a flexible inter-bank exchange rate market.

The CBN said the workings of this market will be consistent with its objectives of enhancing efficiency and facilitating a liquid and transparent Foreign Exchange Market.

Emefiele, who was represented by CBN Director, Financial Policy and Regulation Department, Anthony Ikem, said: “The CBN wants to accommodate and carry all stakeholders along. All that management is requiring for the BDCs is to be more patient. The new policy is being tested. Efforts will be made to see how the BDCs, which are critical to economic development, will be carried along”.

The CBN boss promised the operators that they will be part of the policy, adding that more collaboration between the regulator and operators is needed to move the economy forward.

He said the CBN will review the BDC operational guidelines to ensure they are in line with regulatory requirement and prepare the operators for the task ahead.

President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said to kick-start the new policy regime, the CBN had injected $4.2 billion to the market which helped to address unmet payment obligations promoting market volatility.

He said the first concern over the policy is the complete exclusion of BDCs from the new forex regime, stoppage of dollar sales to BDCs, new guidelines that restricted the business of operators as well as various circulars designed to hurt BDC operations.

He said the new forex regime is being challenged by inadequate liquidity in the market, preference of open accounts by foreign suppliers over the newly introduced naira settled OTC Futures among other factors.

Gwadabe said if not properly implemented, the policy may lead to huge forex loses by manufacturers, further rise in inflation and decline in Gross Domestic Product (GDP) growth.

He said the CBN and ABCON would work together to stabilize the forex market and exchange rates. He urged the CBN to be more sensitive to the BDC industry and considerate in its policy formulation to allow the industry play its role.

“The present situation in the forex market is skewed against BDCs and the result is the huge gap between the interbank and parallel market forex rates, which provides opportunity for sharp practices,” he said.

The ABCON boss called for a compulsory dollar inflows from their oversee accounts Forex Primary Dealership (FXPD) operators, where over $4 billion idle funds are warehoused, instead of relying on the available forex to meet market demands.

The FXPDs qualified lenders are registered authorized dealers designated to deal with the CBN on large trade sizes on a two-way quote basis. They will serve as the bulk traders dealing directly with the CBN on forex matters.

The CBN guideline for the FXPD stipulated that to qualify as an FXPD, a bank is required to have a minimum of N400 billion in total foreign currency assets; minimum shareholders fund unimpaired by losses of at least N200 billion and minimum Liquidity Ratio of 40 per cent.

Gwadabe faulted the stringent conditions for qualification as an FXPD saying it will establish a new cartel in the banking industry and place only a few banks in advantage positions

Codedzng:
I dey Laugh O !!!

989900:
Some comments here are just nauseating, why not just keep quiet if you've got no clue.

Keneking:
Hope its not like Pontius Pilate and case of Barnabas