CBN Directs BDCs to Sell FX Within 2.5% of I&E Rates

August 19, 2023
FX Buffer

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) has announced additional guidelines for Bureau De Change (BDC) operators in a bid to improve the 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.

Recall that in August 2021, the apex bank under, Mr Godwin Emefiele, who is now under suspension, ended the sale of forex to BDCs in the country, saying the parallel market had become a channel for illicit forex flows and graft.

As a result, the lender said it would no longer process applications for BDC licenses in the country and instead announced the weekly sales of the foreign exchange through the commercial banks.

The new operational mechanism, contained in a circular dated August 17, stated that the spread on buying and selling by BDC operators would be within an allowable limit of -2.5 per cent to +2.5 per cent of the Nigerian Foreign Exchange market window weighted average rate of the previous days.

In the circular, signed by Mr O.S Nnaji, the Director of the 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.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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