The Association of Bureau De Change Operators of Nigeria (ABCON) has attributed the widening exchange rate disparity between the official and parallel market exchange rates to acute scarcity of dollars.
ABCON in its quarterly economy review for the first quarter of 2022 said this was due to the continued suspension of forex sales to BDCs by the Central Bank of Nigeria (CBN), as well as lack of credibility of exchange rate policy.
The review showed that the gap between the official and parallel market exchange rates (premium) widened to N171.83 per dollar at the end of first quarter (Q1’22) from N106.33 per dollar on Wednesday, July 28, barely a day before the apex bank suspended dollar sales to BDCs.
ABCON expressed concern over the inability of the fiscal and monetary authorities to address the wide gap between the parallel market and multiple exchange rates in the country.
The group said that the fiscal and monetary policy in the country cannot stop the premium that rent-seeking forex dealers were pursuing, noting that multiple exchange rates cause distortions by manipulating relative prices in the economy and increase opportunities for this rent-seeking behavior.
The association said, “Multiple exchange rates cause distortions by manipulating relative prices in the economy and widen opportunities for rent-seeking behaviour for those who have access to the lower exchange rates.
“When the multiple exchange rates are corrected, it would promote a more efficient application of market-driven relative prices to allocate resources in the economy.’’
The Association also highlighted the nation’s huge public debt and increasing level of poverty and urged the Federal government to reconsider its strategy of relying on borrowing to grow the economy.