The Central Bank of Nigeria (CBN) has announced additional guidelines for Bureau De Change (BDC) operators in a bid to improve efficiency of the Nigerian foreign exchange market.
The decision comes two years after the apex bank banned the sale of dollars to BDCs amid efforts to stabilize the market. However, the latest directive does not state that the central bank will resume the sale of dollars to the BDCs.
The new operational mechanism, contained in a circular dated 17 August, stated that the spread on buying and selling by BDC operators will be within an allowable limit of -2.5 percent to +2.5 per cent of the Nigerian Foreign Exchange market window weighted average rate of the previous days.
In the circular, signed by O.S Nnaji, the Director of Exchange Department, the bank ordered a mandatory rendition by BDC operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly) on the Financial Institution Form Rendition System (FIFX) which it said has been upgraded to meet individual operators requirements.
The apex bank warned that non-rendition of returns would attract sanctions which may include withdrawal of operating license with effect from the date of the circular.
“Where Operators do not have any transaction within the period, they are expected to render nil returns. Please be guided accordingly and ensure compliance,” the circular said.
In August 2021, the CBN ended the sale of forex to Bureau De Change operators, saying the parallel market had become a conduit for illicit forex flows and graft.
The bank said it would no longer process applications for BDC licences in the country.
Weekly sales of foreign exchange by the CBN was thereafter designed to go through commercial banks, the suspended governor of CBN, Godwin Emefiele, said at the time.
“We are concerned that BDCs have allowed themselves to be used for graft,” Mr Emefiele said.
He argued that international bodies, including some embassies and donor agencies, had been complicit in illegal forex transactions that hindered the flow of foreign exchange into the country.
The directive was issued a few days after the acting central bank governor, Folashodun Shonubi, met with President Bola Tinubu during which he blamed the high exchange rate of the dollar to the naira at BDCs on speculators. He said the government would put measures in place to check the activities of currency speculators.
“We do not believe that the changes going on in the parallel market are driven by pure economic demand and supply but are topped by speculative demand from people,” he told journalists after the meeting.
The bank chief said he briefed President Tinubu on some of the plans to address the challenge.
“Some of the plans and strategies, which I’m not at liberty to share with you, means sooner rather than later, the speculators should be careful because we believe the things we’re doing when they come to fruition may result in significant losses to them.”
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