Association of Bureau De Change (BDC) Implements Market Shutdown Concerning Naira-Dollar slide

 Association of Bureau De Change (BDC) Implements Market Shutdown Amidst Naira-Dollar Concerns

In response to the persistent decline of the naira against the US dollar, the Association of Bureau De Change (BDC) Operators has taken a decisive step by closing the market for transactions on February 1, 2024. The move follows media reports suggesting that the dollar was trading at N1,500, even though BDC operators were still maintaining the rate at N1,400.

Expressing frustration over being held responsible for the ongoing depreciation of the naira, the BDC operators have initiated a 'no sales policy' to mitigate the situation. A source within the BDC mentioned that this decision was influenced by the recent media reports attributing the fall in the naira's value to black market operators.

"We will not be opening the market today. We want to close the market because, honestly, the naira is just crashing anyhow. This was caused by some media reports this week that the dollar was now selling for N1,500 even though we were still selling at N1,400. Now everybody is blaming black market operators, and that’s why we decided that the market will remain closed today," explained the source.

In addition to the market closure, the BDC operators plan to resume operations the next day with the expectation that the exchange rate will be less than N1,400 per dollar.

The Abuja chapter of the Association of Bureau De Change (BDC) Operators has taken a similar stance, announcing the indefinite closure of their business premises starting from Thursday, February 1, 2024. Abdullahi Dauran, the chairman of the association, attributed the scarcity of US dollars to their decision. He further pointed out that online banking transactions and cryptocurrency activities were contributing factors to the shortage of dollars.

Meanwhile, in a bid to stabilize the fluctuating exchange rate, the Central Bank of Nigeria (CBN) has issued a directive for Deposit Money Banks to reduce their excess dollar reserves by February 1, 2024. This directive, outlined in a circular released on Wednesday, is part of the CBN’s broader strategy to address volatility in the foreign exchange market.

Expressing concerns, the CBN noted that some commercial banks have been maintaining long-term foreign exchange positions, seeking to profit from fluctuations in exchange rates. The guidelines in the circular, titled "Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks," aim to mitigate the risks associated with these practices.

This directive follows another recent circular cautioning banks and foreign exchange dealers against reporting inaccurate exchange rates, signaling the CBN's commitment to addressing issues contributing to the instability in the foreign exchange market.