CBN Announces Transaction Limit for Bureau De Change Operators As Dollar Crashes
- The CBN has set transaction limits for Bureau de Change operators seeking to purchase dollars from the official market.
- The apex bank has also instructed BDCs not to exceed the allowable transaction limit when selling dollars to Nigerians.
- In an exclusive chat with Legit.ng, ABCON President Aminu Gwadabe explained some of the challenges faced by BDCs
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Central Bank of Nigeria (CBN) has announced a weekly transaction limit of $25,000 for Bureau de Change (BDC) operators when purchasing dollars from Authorised Dealer Banks (ADBs) to satisfy retail market demand.
Also, BDCs can only disburse purchased FX for specific transactions, with a maximum of $5,000 per transaction, quarterly.
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This was disclosed in a circular signed by W. J. Kanya, Acting Director of the Trade & Exchange Department at the CBN.
The apex bank noted that BDC operators' eligible transactions include only Business Travel Allowance (BTA), Personal Travel Allowance (PTA), overseas school fees, and overseas medical expenses.
Details of CBN instruction to BDCs
According to the CBN, BDCs must source their allotted forex from a single authorised dealer bank per week.
Also, authorised dealers must sell foreign exchange to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window to ensure pricing consistency.
Additionally, the CBN has imposed a 1% cap on the margin that BDCs can charge end-users above their purchase price, regardless of the forex source.
This restriction is designed to prevent speculative activities and enhance oversight, Dailytrust reports.
The CBN also warned that any BDC found violating this rule would face appropriate sanctions.
CBN order to authorised dealers and BDCs
The CBN has introduced mandatory reporting requirements for both Authorised and BDCs.
According to the circular authorised dealers must submit weekly reports of their forex sales to BDCs in a specified Excel format to the CBN’s Trade and Exchange Department via teddmo@cbn.gov.ng.
BDCs are required to submit daily returns on forex purchases and sales (utilisation) through the Financial Institutions Forex Reporting System (FIFX).
According to the guidelines, BDCs can only allocate purchased FX for specific transactions, with a maximum limit of $5,000 per transaction per quarter.
Additionally, the CBN has cautioned that any ADB or BDC found violating these regulations, including engaging in forex diversion, will face strict penalties, which may include the suspension of their dealership license, BusinessDay reports.
The CBN explained:
“These measures will help the CBN track forex flows and prevent illicit activities in the currency market."
ABCON raises challenges faced
Speaking to Legit.ng in an exclusive chat, Aminu Gwadabe, the president of the Association of Bureau De Change Operators of Nigeria (ABCON) said that they are finding it difficult to buy dollars.
He said:
"Since the introduction of the circular no any bank that has sold any dime to BDC despite the positive impact the announcement created in stabilising and elimination of volatility in the market.
"I therefore advise the Central bank to revisit the circular and ensure the bankers do the needful."
Dollar crashes massively in forex market
Legit.ng reported earlier that the value of the naira had dropped significantly against the dollar in all foreign exchange markets.
Thereafter, traders exchanged the dollar below the N1,600 mark for the first time in months.
The new exchange rate was a big win for the CBN following recent reforms.
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Source: Legit.ng
