Bureau De Change operators may seek alternative sources to get foreign exchange supply as many of them have suffered shortages.
This was following the Central Bank of Nigeria’s decision to halt sale of foreign Exchange to BDC operators.
Survey of anecdotal sources revealed that BDCs do not solely depend on the CBN but have sourced for FX through the peer-to-peer transactions to fund their supplies.
The recent ban has forced them to amplify their reliance on sourcing FX via these sources. For example, BDCs take advantage of the limit on domiciliary account balances as well as transfer limits to facilitate international cash receipts and payments.
Also, many of them have moved to solidify relationships with high volume customers which has required them to raise their bid quotes as they compete for these volumes.
This has forced them to raise their offer quotes. Unsurprisingly, on Tuesday, the parallel market rate jumped to N527/$1, the highest in four years.
However, a more interesting loophole has been identified with BDCs relying on using customers to buy Personal Travel Allowance and Business Travel Allowance from their banks.
The customers use fake visas in conjunction with already purchased travel tickets to buy FX from banks before going on to cancel the tickets.
The dollars are then sold to the BDCs at cheaper rates giving them the opportunity to sustain exorbitant margins earned on their FX transactions.
In response, the Central bank has directed all commercial banks to publish on their websites the names and Bank Verification Numbers of customers who are engaged in this act.