CBN takes banks, BDCs head-on over new forex rules
The Central Bank of Nigeria (CBN) has declared a full-scale intervention in the nation’s foreign exchange market, with banks and Bureau De Change (BDC) operators in the searchlight.
According to insider source at the apex, the latest reform efforts to consolidate gains in the last one year, came on the heels of suspicious act of sabotage against fledgling forex market by major participants.
The exchange rate for the dollar had suddenly risen to N366 per dollar mid last week and persisted till the weekend, despite intervention, a situation that seems to confirm the suspicion.
Of particular concern was the observed less participation in buying and selling of the forex by the BDCs, while some banks were also leveraging on protocols to prolong disbursements for Basic/Personal Travel allowances, school fees and medical tourism.
CBN, in its latest directive for forex disbursements, said banks must now pay over the counter and on demand for invisible items.
Likewise, the BDCs must now participate fully in the uploaded three-time weekly auctions for them by the apex bank.
Meanwhile, the Association of Bureaux De Change Operators of Nigeria (ABCON), yesterday, rejected CBN’s directive mandating BDCs to make three forex biddings and purchases on weekly basis, a development that signals a showdown sooner.
The group also insisted that the regulator review BDC’s dollar purchase rate to align with the rate commercial banks’ buy.
The new directive, with immediate consequences for non-compliance, will lead erring BDCs to suspension or outright revocation of operating licence.
The source confirmed that to ensure compliance, the CBN Governor, Godwin Emefiele and his top officials, would begin a random checks and calls on banks, warning financial institutions to comply or face consequences.
But the bank’s spokesman, Isaac Okorafor, while confirming the new directive, said that CBN is determined engage any institution or groups that wants scuttle the relative stability in the last on year.
“we have enough to fight the course of the Naira. Our reserves is huge and we did it better with lower reserves, now would not be different. But any stakeholder must play by the rule,” he said.
ABCON President, Alhaji Aminu Gwadabe, said in a statement that CBN’s directive mandating BDCs to make such purchases is not in line with global best practices and should be put on hold.
“The CBN’s directive at this time of our operational difficulties is no doubt precarious and vague and was intended to emasculate a sector that has helped the system to stabilise and thus unacceptable,” he said.
The CBN’s goal is to ensure that eligible travelers are able to access foreign exchange for the Business Travel Allowances (BTA), Personal Travel Allowances (PTA), school fees payment and medical bills payment. It is also in line with its plan to deepen foreign exchange liquidity available in the market.
Gwadabe said the regulator should firstly merge BDC dollar buying rate with that of commercial banks and also pay ABCON disbursement fees as it is practiced globally.
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