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To force exchange rate down, Nigeria clamps down on money changers

In order to force a favourable exchange rate for the Naira, the Nigerian government has commenced a clampdown on money changers, called Bureau De Change operators.

Dozens of money changers have since Wednesday been arrested by officials of the State Security Service, SSS, in Lagos and Abuja.

The arrests, PREMIUM TIMES learnt, commenced after a meeting between the SSS, officials of Nigeria’s Central Bank, CBN, and leaders of the Bureau De Change in Abuja over the weekend.

At the meeting, held in Abuja, the officials agreed that sharp practices by Bureau De Change operators was a major factor responsible for the value of the Nigerian currency which has gone as high as N480 to a dollar at the black market and the parallel market despite selling below N400 at the official market.

“The meeting agreed to force the bureau de change to buy from willing sellers at N390 or lower and sell to willing buyers at N400 or below,” an official briefed on the agreements said.

The Naira value was arrived at after considerations of recent actions by the Central Bank to stabilise the currency. The Bank now allocates dollars to licensed money changers through Travelex at about N381 per dollar, to enable them sell to end users at about N385 per dollar.

As part of the guidelines, the Central Bank directed the operators not to sell foreign exchange above two per cent margin of the buying rate.

However, there have been reports that some money changers, particularly those unregistered, have been engaging in some illegal activities considered to be undermining the foreign exchange policy.

On Monday, the Central Bank warned Nigerians in the Diaspora against patronizing unlicensed money transfer operators.

The bank said the illegal operators use Naira-denominated accounts opened in local commercial banks to lure unsuspecting customers with ridiculous exchange rates.

The foreign currencies from such transactions, the CBN said, were used to fund the activities of the parallel market.

The CBN warned deposit money banks (DMBs) against being used to carry out such illegal transactions, saying it would not hesitate to block such accounts when discovered, while operators would be handed over to the law enforcement agencies for prosecution.

Officials react

The President of the Association of Bureaux De Change Operators of Nigeria, ABCON, Aminu Gwadabe, did not answer calls to his telephone seeking his comments on the development.

He also did not respond to a text message sent to his telephone.

A senior Central Bank official, who requested anonymity because he was not authorized to speak on the issue, said the bank was aware of the arrests of the money changers.

“The security operatives are doing their job. None of the registered BDCs operating according to the stipulated guidelines has been affected,” the official said. “The unregistered operators in the black market are the ones responsible for the pressure on the Naira, with the artificial exchange rate they use.”

Despite the clampdown, however, PREMIUM TIMES learnt that the money changers have still found a way to short-change the system.

At their base in Zone 4 in Abuja, the Nigerian capital, money changers reportedly tell interested customers that the dollar is sold for N400. Suspicious of the identity of the enquirer, the operators tell unfamiliar customers that they, however, do not have dollar to sell.

Familiar trusted customers are, however, told they can buy the dollar at about N470.

The black market operators are a toast of Nigerians and businesses who find it difficult to access foreign exchange from the banks.

An over 50 per cent increase in price of crude, Nigeria’s main export commodity, and a reduction of volume of exported oil due to militancy in the Niger Delta, has reduced the country’s foreign earnings, thus causing a scarcity of foreign exchange.

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