CBN Releases New Rules for 5,691 BDC Operators As Naira Nears N700/$ on I&E Window, Falls at Black Market

• The Central Bank of Nigeria has released a new set of guidelines for Bureau de Change (BDC) operators in the country
• This comes a few days after the President of ABCON, Aminu Gwadabe, told Legit.ng that the CBN should allow BDCs access to the official forex market
• The naira has appreciated significantly at the official market but challenges remains at the black market

The Central Bank of Nigeria has restricted Bureau de Change (BDC) to a certain rate against the official window when buying and selling forex to customers.

The new directive is in a circular issued by its Director of trade and Exchange Department, Dr O.S Nnaji, to BDCs on Friday, August 18, 2023.

According to the circular, the spread on buying and selling by BDC operators but not exceed of -2.5 percent to +2.5 percent of the Nigerian Foreign Exchange market window weighted average rate of the previous day.

This means that if the weighted average rate of the official window closes at N700 a dollar, BDCs will only be allowed to sell up to N718 the next day.

The statement reads:

“Mandatory rendition by BDC Operators of the statutory periodic reports (daily, weekly, monthly, quarterl,y and yearly) on the Financial Institution Forex Rendition System (FIFX,) which has been upgraded to meet individual Operator’s requirements.

“Operators are to note that with effect from the date of this circular, non-rendition of returns would attract sanctions which may include withdrawal of operating license. Where Operators do not have any transactions within the period, they are- expected to render nil returns. Please be guided accordingly and ensure compliance.”

Why is CBN taking such decision?

According to CBN, the move is part of measures to improve the efficiency of the forex market and takes effect immediately.

The apex bank also hopes it will help reduce and harmonise the various exchange rates in the country.

Data collated by Legit.ng showed that as of the close of business on Friday, August 19, 2023, the spread between the black market and the official window increased to N120.48.

In the official market, the naira appreciated to N739.52/$, compared to the N740.67/$ it was exchanged for in the previous session on Thursday.

However, in the parallel market, the naira sold for N860/$, while in the Peer-to-Peer market, mostly used by crypto traders, the naira exchanged at N858.5/$.

CBN, BDCs relationship

While the move by the CBN will come as a big blow for BDCs operators who are cut off from accessing forex in the official window.

The latest move may serve as a glimmer of hope that the CBN is considering reintegrating the over 5,000 BDC operators into the thick of things in the forex market.

In an earlier interview with Aminu Gwadebe, the president of the Association of Bureau de Change Operators of Nigeria (ABCON) had called on CBN to reverse its decision banning BDCs operators from official investors and exporters window.

He stressed that BDCs can go a long way in helping the CBN’s monetary policies and efforts to create stability in the forex market.

Currently, BDCs independently source forex and resell to importers, Nigerians, and students in need of easy access to dollars.

BDCs operators in Nigeria

There are 5,691 approved BDC operators by the CBN. Here is a breakdown of top 10 states with the highest number.

• Lagos: 2,958
• FCT: 1,179
• Kano: 981
• Anambra: 259
• Kaduna: 55
• Abia: 50
• Oyo: 32
• Enugu: 25
• Rivers: 24

“No more tricks”: CBN announces dollar to naira price verification portal

Meanwhile, in another report, it was revealed that the Central Bank of Nigeria had introduced a new portal that will put an end to malpractices in the foreign exchange market.

The portal is set to go live by the end of August 2023, and it is expected that it could be a game-changer if it is done right

Source: Legit.ng