SAT 31 JULY, 2021-theGBJournal- At the July policy meeting, the Monetary Policy Committee unanimously voted to keep the MPR at 11.5% alongside other key monetary policy parameters. The major highlight of the meeting was the decision reached on the activities of Bureau De Change Operators (BDCs) – the CBN Governor, Godwin Emefiele disclosed that the apex bank has immediately discontinued the sale of FX to the BDCs due to their rent-seeking behaviour.
The Governor also disclosed that a significant portion of weekly FX allocation to the BDCs would be channelled to the commercial banks to meet the legitimate FX demand of consumers.
In the short term, we expect the decision to amplify pressures on the exchange rate in the parallel market, given the knee jerk reaction from market participants induced by the urge to stockpile the greenback.
Overall, we believe the effectiveness of the modalities in disbursing the greenback to the retail segment through the commercial banks would determine how much the current rates at the parallel market will diverge from the NAFEX rates over the medium term.
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