- 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 remain at the black market
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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 must not exceed -2.5 per cent to +2.5 per cent of the Nigerian Foreign Exchange market window weighted average rate of the previous day.
“No more N800/$”: Despite CBN’s new instructions to BDCs, naira crashes in official, Black FX markets
This means that if the weighted average rate of the official window closes at N700 a dollar, BDCs will only be allowed to sell above N718/$ the next day.
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CBN 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 a 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.
Naira to dollar exchange rate
Data collated by Legit.ng showed that as of the close of business on Friday, August 18, 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 to restruct how much a BDC can sell or buy dollars is a big blow, it may also serve as a glimmer of hope that the CBN is considering reintegrating the over 5,000 BDC operators into the forex market.
In an earlier interview with Aminu Gwadebe, the Association of Bureau de Change Operators of Nigeria (ABCON) president had called the CBN to reverse its decision banning BDCs operators from the official investors and exporters window.
According to him, the BDCs can go a long way in helping the CBN's monetary policies and efforts to create stability in the forex market.
BDCs independently source forex and resell to importers, Nigerians, and students needing easy access to dollars.
BDC operators in Nigeria
There are 5,691 approved BDC operators by the CBN. Here is a breakdown of the 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
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