BDCs clampdown forces forex transaction underground

Foreign currencies transaction at the Bureau de Change segment of the foreign exchange market has been stifled since the clamp down on the operators by security agencies.
An investigation by the News Agency of Nigeria on Tuesday in Abuja revealed that activities in the segment were conducted in secret since Monday.
This is because most of the operators do not want to sell the foreign currencies at the price fixed by the Central Bank of Nigeria.
Operatives of the Department of State Services and the Economic and Financial Crimes Commission raided the BDCs in Lagos and Abuja on Wednesday and Thursday and arrested operators selling the currencies above stipulated rates.
NAN reports that usually the rate at the parallel market is determined by demand and supply of the foreign exchange.
When demand is higher than supply, the operators hike prices.
To regulate the segment, therefore, the CBN recently came out with a policy that allows each BDC to buy dollars from Travelex at N381 per dollar and sell to customers at a maximum of N400 per dollar.
Also, the BDCs were asked to buy back dollars from customers at nothing more than N390 and resell at N400.
One of the parallel market operators, who pleaded anonymity, said: “When customers come to buy, we don’t sell more than $200 to each buyer at the stipulated price of N400 to a dollar.
“We know our customers and we have told them that this N400 price will not work, so, if they are interested in buying, they have to be ready to pay higher.
“Yesterday, I sold at N458 to a dollar.
“I didn’t even allow the customer to come to my shop because you cannot tell who is watching.”
On why they insist on selling above regulated price when they buy the dollar at N381 from Travelex, he said the demand for the currency was high as against the allocation they got from the government agency.
According to him, each licensed operator gets about $15,000 every week, which is not enough to meet the demand.
He explained that some of the operators had dollars that they bought at over N400 and kept for the rainy day, adding that until those funds were sold, it would be difficult for any operator to sell at N400.
Another operator, also on condition of anonymity, said now that the cost of foreign currencies had dropped, there was an influx of people looking for dollars to buy rather than to sell.
He predicted that in December, all parties would adjust to the new regime in the market.
He said greedy operators, concerned about personal gains rather than country, were the ones fighting the policy and still selling at their own rates.
He said: “I pray that the security agencies will succeed in clearing the ‘bad eggs’ among us so that sanity will return to the segment.’’