The Central Bank of Nigeria has amended the operational standards for the country's Bureau De Change Operators. The new modifications were announced by the apex bank in the form of a circular in order to boost the efficiency of the Nigerian foreign exchange market.
The changes include the following:
- The spread on buying and selling by BDC operators shall be within an allowable limit of -2.5% to +2.5% of the Nigerian Foreign 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 (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
- Under the leadership of the recently inaugurated Tinubu-led administration, the Nigerian government has been exploring various strategies to harmonize the official and black market exchange rates of the Dollar which is hovering around N150. As such, this recent circular suggests a potential reconsideration of the decision to halt the sale of Foreign Exchange to Bureau De Change operators, a policy originally put in place by the previous CBN governor, Godwin Emefiele, in 2021.
The Central Bank of Nigeria (CBN) believes that Bureau De Change (BDC) operators have the ability to increase FX supply in the market, easing pressure on exchange rates. BDCs have always taken advantage of arbitrage opportunities and the presence of several exchange channels in Nigeria.
So one wonders if the new reforms, as well as the probable reintroduction of FX sales to BDCs, will close the rate differential.
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