The Central Bank of Nigeria, CBN has unveiled a set of operational procedures for the Bureau De Change sector of the market to trade foreign currencies at rates comparable to those available on the Investor & Exporter forex window.
In a circular dated August 17, 2023, titled ‘Operational Mechanism for Bureau De Change Operations in Nigeria’, released on Friday, the directive was addressed to all Bureau De Change entities and the general public.
The circular, signed by Dr. O.S. Naji, the Director of the Trade & Exchange Department, emphasized the immediate implementation of these measures. The move is aligned with efforts to enhance the efficiency of Nigeria’s foreign exchange market.
According to the circular, “BDC operators are required to maintain a spread between buying and selling rates within the permissible range of -2.5 percent to +2.5 percent of the previous day’s weighted average exchange rate from the Nigerian exchange market window.”
Furthermore, the circular introduced mandatory reporting by BDC operators of periodic financial reports (daily, weekly, monthly, quarterly, and yearly) through an upgraded forex rendition system for financial institutions. Failure to submit these returns could result in sanctions, including the possible withdrawal of operating licenses. BDCs that had no transactions during a specific period are expected to submit nil returns.
However, despite the immediate commencement of this order, it has been observed that most BDCs with access to limited forex have not complied with the new directive.
Data from the Financial Markets Dealers Quotations (FMDQ) indicated that the Nigerian naira started trading at 761.82/$ on the I&E window, closing at 739.52/$ by the end of Friday’s trading session. The total turnover on the window for the day was $130.92 million.
Contrary to the directive, some unnamed BDCs stated that they sold the naira at 865/$ on Friday. One BDC representative explained, “CBN is not giving us the dollar, and I did not get it cheap at the official rate, so I cannot sell at that rate.”
Another BDC source mentioned that the rate they adopted was 865/$ and highlighted that they might choose not to sell if the black market rate proves more advantageous.
President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, noted that this new directive aligns with industry financial reforms applicable to licensed BDCs. He clarified that these operators should now reference the I&E window’s closing rate for their transactions within the specified spread.
Gwadabe acknowledged that the CBN had noticed some BDCs accessing the independent window for transactions, even if they weren’t using the CBN’s window. Additionally, some BDCs were conducting transactions through their accounts. The CBN aimed to ensure accurate rendition reporting by these entities.
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