Bureau De Change operators kick as CBN restricts forex trading

The Bureau De Change market segment will now be able to trade foreign currencies at the same prices as those available on the Investor & Exporter FX window, thanks to a new operational mechanism revealed by the Central Bank of Nigeria.

In a circular headed “Operational mechanism for Bureau De Change operations in Nigeria,” dated August 17, 2023, and distributed on Friday, it issued the instruction to all BDCs as well as the general public.

Its implementation should take place right away, the apex bank stated in the circular signed by Dr. O.S. Naji, Director of the Trade & Exchange Department.

This, according to the statement, was done to help the effort to increase the effectiveness of the Nigerian foreign exchange market.

The circular stated, “The spread on buying and selling by BDC operators shall be within an allowable limit of -2.5 per cent to +2.5 per cent of the Nigerian exchange market window weighted average rate of the previous day.

“Mandatory rendition by BDC operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly), on the financial institution forex rendition system which has been upgraded to meet operators’ 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 licence. Where operators do not have any transaction within the period, they are expected to render nil returns.

“Please, be guided accordingly and ensure compliance.”

However findings by revealed that the order which was to commence immediately was being snubbed by most BDCs who had access to the scarce forex.

Figures from the FMDQ showed that the naira commenced trading on the I&E window at 761.82/$ before closing at 739.52/$ on Friday.

As of Friday’s end, the window’s overall turnover stood at $130.92 million.

The naira was sold at 865/$ on Friday, according to some BDCs who did not want to be named since they were disobeying the new regulation.

According to a BDC who spoke with The PUNCH, “We purchased and sold dollars today for 840 and 865 each. I am unable to sell at the official rate since CBN is not providing us with dollars, and I did not purchase them at a discount.

“How many people have access to that official rate; the dollar is still scarce and expensive.”

Another BDC who would not want to be quoted also said, “The rate we sold today is 865/$. The implication of the new guideline is that if it pays to sell at the black market, I will not sell as a licensed operator.”

Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria, said in a statement that the new instruction was in line with the financial reform for the sector with regard to the licensed BDCs running the guideline.

Gwadabe said, “It is an anchor rate for them, if a customer comes, then you look at what is the closing rate for the I&E window and you buy at the -2.5 per cent to +2.5 per cent; the same thing if a customer comes to you, you use the same I&E window.”

He mentioned that the CBN had discovered through its intelligence report that some BDCs were accessing the independent window and transacting even though they were not using the CBN window.

In the meantime, he claimed, other transactions indicated that BDCs were making purchases and sales using their accounts.

According to him, the CBN also made sure that BDCs received a return on the operations they carried out.