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Naira Value Drops, As BVN Paralyses Forex Market
Activities at the retail segment of the official foreign exchange market were grounded, yesterday, as end users avoided bureaux de change (BDCs), to avoid submitting their Biometric Verification Number (BVN) for foreign exchange transactions.
This, however, resulted in sharp increase in demand for dollars at the black market, prompting the naira to depreciate to N230 per dollar from N225.
Recall that the Central Bank of Nigeria (CBN) made the BVN a criteria for sale and purchase of foreign exchange by banks and bureaux de change (BDCs) effective November 1.
Vanguard investigation, however, revealed that instead of foreign exchange end users submitting their BVN to BDCs as mandated by the CBN, most of them moved to the black market for their foreign exchange needs. This in turn increased demand in the market, prompting the parallel market exchange rate to rise to N230 per dollar from N225 at the close of business on Tuesday.
Confirming this development to Vanguard, Mr. Harrison Owoh, Chief Executive Officer, H.J Trust BDC said that “most of the customers were not willing to submit their BVN due to fear of what it might be used for. This has slowed down sales of forex by BDCs because we can’t sell without obtaining the BVN.”
An Abuja-based BDC manager, who spoke to Vanguard on condition of anonymity said that the problem was severe in Abuja, with BDCs having difficulty selling the dollars purchased from the CBN, last week.
“As I am talking to you, most BDCs in Abuja may not take dollars from CBN today (yesterday) because we have not sold the ones we bought last week. The customers do not want to submit their BVN for security reasons. They are patronising the black market, that is why the rate has gone up sharply, and I can tell you, the rate might rise higher if the situation persists.”
President of Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, however, blamed the situation on lack of adequate awareness on the part of the CBN before implementing the policy. He said that while ABCON, as a partner in progress with the CBN supports the use of BVN as criterion for foreign exchange transactions, the association had, however, called the attention of the apex bank to the need to delay implementation to allow massive publicity to create awareness among the populace.
“We had predicted what is happening now, that in the absence of adequate awareness, patronage will shift to the black market, leading to depreciation of the Naira in the market”, he said.