BDC Suspension Worsens Dollar Scarcity, Parallel Market Premium – ABCON

The Association of Bureaux De Change Operators of Nigeria (ABCON) said the widening gap between the official and parallel market exchange rates, is driven by acute dollar scarcity due to the continued suspension of foreign exchange sales to BDCs by the Central Bank of Nigeria(CBN).

ABCON in its Quarterly Economy Review for the first quarter of the year (Q1’22), expressed concerns over the inability of the fiscal and monetary authorities to address the wide parallel market and multiple exchange rates in the country.

The gap between the official and parallel market exchange rates, it said, widened to N171.83 to the dollar at the end of the first quarter from N106.33 per dollar on July 28, 2021, a day before the apex bank suspended dollar sales to BDCs.

ABCON said: “A premium is the outcome of market restrictions that drive the non-official supply and demand for foreign currency which is a symptom of the inconsistency of fiscal and monetary policies. It also shows lack of credibility of exchange rate policy given the level of foreign reserves.

The association also highlighted the nation’s huge public debt and increasing level of poverty,  saying the Federal government should reconsider its strategy of depending on debt to grow the economy.

The association said it was high time the authority  reconsidered her current strategies of total dependence on debt for the survival of the economy, otherwise it may run the country to a comatose coupled with the high and uncontrollable incidence of insecurity in the nation.