CBN retains $250,000 weekly sales to Bureau de Change operators

By The Citizen

The Central Bank of Nigeria (CBN) has said that foreign exchange sales to Bureau de Change (BDC) operators would remain at $250,000 per week per BDC.

In a circular to all authorised dealers and BDC operators, CBN Director, Trade and Exchange, Musa Batari, said the selling rate by the authorised dealers to BDCs shall be the prevailing interbank exchange rate, plus a margin not exceeding one per cent.

He explained that foreign exchange cash purchased by BDCs from authorised dealers and the CBN shall be sold to foreign exchange end-users at a rate not exceeding two per cent margin above the buying rate.

'For the avoidance of doubt, the margin shall be applicable to all funds to be retailed by BDCs regardless of sources of the fund,' he said.

Batari also explained that authorised dealers shall continue to render weekly returns on sales of BDCs, while the BDCs shall render weekly returns on purchase from authorised dealers. He enjoined BDCs to keep adequate records of foreign exchange sale and purchases for purposes of monitoring by the authorities.

The apex bank observed that some authorised dealers have continued to deal in 'free funds' without adequate documentation contrary to provisions of extant regulation.

The regulator reminded the dealers that the circular is still in force and all dealings in foreign exchange must be supported with appropriate documentation and returns rendered to regulatory authorities irrespective of the source of the funds, adding that violators of the laws will be sanctioned.

The regulator had in September replaced the Wholesale Dutch Auction System (WDAS) with the Retail Dutch Auction System (RDAS) because of the ineffectiveness of the former in addressing hitches in the forex market.

It also withdrew the licences of 20 bureau de change (BDCs) operators for violating forex rules, an indication that more licences withdrawal may be seen in future, should the violations continue.

Under the RDAS, banks and other authorised dealers are required to place bids on behalf of individual clients who qualify to buy forex at the official auction. The change from WDAS to RDAS allows the authorities to monitor more accurately various sources of forex demand and any potential duplication of forex demand in the system. Banks will remain responsible for all documentation requirements.