Bureau De Change:
The Central Bank of Nigeria (CBN) has re-introduced Bureau De Change operations into the Nigerian foreign exchange market in a bid to save the Naira.
The CBN made the recall in a circular it issued on Thursday, August 17, 2023.
Also in the circular, the CBN has rolled out new mechanisms for the BDC operators to operte and must adhere to the the measures.
What the new guideline states:
According to the CBN, under the new guidelines, the spread on buying and selling by BDC operators shall be within a permissible range of -2.5% to +2.5% of the Nigerian Foreign Exchange market window’s weighted average rate from the previous day.
Also, the guideline mandates Bureau De Change operators to submit periodic financial reports of their daily, weekly, monthly and yearly operations.
Additionally, the new guideline holds that any BDC operator or customer who fails to meet up with the tenets of the guideline will incur great sanctions.
Such operators risk having their licenses revoked by the CBN.
Also, the CBN urged the general public as well as the Bureau De Change Operators to familiarize themselves with the new guidelines.
The earlier position:
Recall that under the now embattled ex CBN governor, Godwin Emefiele, Bureau De Change oprators were excluded from participating in the Nigerian Forex Exchange Market.
The leadership of Emefiele excluded the operators for various reasons that included corruption, multiple exchange rate system and alleged money laundering.
Also, in June 2023, the CBN announced the unification of all segments of the foreign exchange (FX) market.
This marked the end of the CBN’s control of the forex market.
However, following the decision, the Naira continued its free fall.
So, since that policy took effect, the naira has continued to fair poorly against the dollar and other foreign currencies.
Before Friday 18th of August, 2023, the exchange rate stood at almost N950 naira to one Dollar and about N1,200 Naira to British Pounds Sterling.
This continuous fall of the Naira at the international market has put great hardship on Nigerians.
Meanwhile, the government of President Bola Tinubu has continuously promised to stabilize and improve the naira, hence, the new guidelines and reintroduction of the Bureau De Change operation into the forex economy.
Implication of this new entry of BDC to Nigerian Forex Exchange Market:
With the re-introduction of BDC into the economy, there would be more stability and transparency to exchange rate fluctuations.
Also, the CBN said the new measures will benefit all stakeholders – BDC operators and the general public.
Additionally, the strength of the Naira will improve and by extension, reduce hardship on Nigerians.
CBN introduces FX price verification system portal for importers:
In another development, the CBN has introduced a foreign exchange (FX) price verification system (PVS) portal to enable importers to access forex.
The CBN, in a statement on Thursday night, said a price verification report from the portal is now mandatory for all Form M requests, effective from August 31, 2023.
The Form ‘M’ is a declaration of intention to import physical goods into Nigeria.
“Following the successful conduct of the pilot run and various trainings held with all the banks, the Central Bank of Nigeria hereby announces the Go- Live of the Price Verification System (PVS),” the statement reads.
“All applications for Forms M shall be accompanied by a valid price verification report generated from the price verification portal.
“For the avoidance of doubt, by this circular, the price verification report has become a mandatory trade document precedent to the completion of a Form M.”
“All authorised dealers are, hereby, advised to bring this to the attention of their customers”.
CBN also said it would appropriately sanction any case of infraction.
“Please, ensure compliance,” the bank urged exporters.