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CBN goes after Bureau De Change operators over forex speculation

By News Desk

The Central Bank of Nigeria has beamed its oversight light on Bureau De Change operators in the country with directives that all financial institutions stopped sales of forex to the popular operators.

The apex bank explained that the decision followed an extensive and exhaustive report which identified the BDC operators as illegal dealers and wholesalers of forex as against their purpose.

The CBN Governor, Godwin Emefiele, said that with their illegal operations, the BDC operators have defeated their purpose of existence to provide forex to retail users and that such was hurting the economy and ordinary Nigerians.

Emefiele who disclosed this after the Monetary Policy Committee’s two-day meeting in Abuja on Tuesday said that the ban on sales of forex to BDC in the country was with immediate effect.

He said that the commercial banks would be monitored to provide forex for the legitimate use of Nigerians and monitor compliance with the directive on BDCs.

“In total disregard of the difficulty that the (apex) bank is facing in meeting its mandate of maintaining the country’s foreign exchange reserves to safeguard the value of the naira, we have continued to observe that stakeholders in some of the sub-sectors have not been helpful in this direction.

E“In particular, we have noted with disappointment and great concerns that our Bureau De Change operators have abandoned the original objective of their establishment which was to serve retail end users who need $5,000 or less. Instead, they have become (illegal) wholesale dealers in foreign exchange to the tune of millions of dollars per transaction,” he lamented.

Furthermore, he accused the BDC operators of facilitating grafts, illicit financial flows, and money laundering in the country, adding that the nation’s financial regulator would not hesitate to sanction any bank operating in the country found to be collaborating with BDC operators to facilitate illegal forex dealings.

He also accused international organisations, development finance organisations, and embassies of patronising BDC operators to fund local operations contravening Nigeria’s foreign exchange regulations.

“Despite the fact that Nigeria is the only country in the world today where a central bank sells dollars directly to Bureau De Change operators, operators in the Nigerian Bureau De Change segment have not reciprocated the bank’s gesture to help maintain price stability in that market.

“Given this behavior, it is not surprising that since the CBN began to sell foreign exchange to Bureau De Change, the number of operators has risen from a mere 74 in 2005 to over 2,700 in 2016 – and almost 5,500 BDCs as of today (July 27, 2021),” Emefiele said.

Meanwhile, the MPC also retained the Monetary Policy Rate at 11.5 per cent at the end of the meeting and retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.

Announcing the committee’s decision, Emefiele said, “The MPC made the decision to hold all parameters constant. The committee thought by unanimous vote to retain the Monetary Policy Rate at 11.5 per cent.

“In summary, MPC voted as follows, one, retain MPR at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5 per cent, and retain the Liquidity Ratio at 30 per cent.”

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