Coronavirus: CBN suspends sales of forex to BDCs

Central Bank of Nigeria (CBN)
Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has suspended foreign exchange sales to Bureau De Change (BDC) operators until further notice.

This could further increase the price of the dollar which the apex bank recently announced should be sold by BDCs to end-users at N380 to a dollar from the initial N360 to a dollar.

The CBN announced the suspension of the sale to BDCs in a letter dated March 25, 2020.

The CBN letter, addressed to the Association of Bureau de Change of Nigeria (ABCON) president, notified the association of its decision to suspend sales.

ABCON had earlier on March 24 written to the apex bank, recommending a halt in the weekly sale of forex to the BDCs.

The CBN noted that the suspension follows the government’s directive to restrict gatherings to not more than 20 persons as parts of measures aimed at reducing person-to-person contact and curbing the transmission of the coronavirus (COVID-19).

COVID-19

Since the outbreak of the coronavirus, the global economy has been severely hit amid crash in oil prices and radical change in the operations of businesses and industries around the world.

The CBN acknowledged the contributions of the BDCs in promoting stable exchange rate in recent months, despite challenging circumstances facing the forex market due to drop in crude oil prices.

Earlier, as parts of measures to cushion the economic effect of the virus on the economy, the Central Bank had collapsed the multiple exchange rate policy that determined the value of the naira and adopted a single exchange rate.

The development implied that Nigeria now operates a uniform rate for the official rate, bureau de change operators, importers and exporters amongst others.

A circular signed by the Director, trade and exchange department of the CBN, Ozoemena Nnaji, gave directive on the disbursement of the proceeds of the International Money Transfer Operator (IMTO).

The CBN had said that IMTSOs will sell to banks at N376 per dollar, banks to CBN at N377 per dollar, CBN to Bureau de change operators N378 per dollar, BDCs to end-users not more than N380 per dollar and the volume of sales for each market set at $20 thousand per BDC.

Although analysts explained that the move implied that the naira had been devalued, the CBN countered that narrative, adding that “market fundamentals do not support Naira devaluation at this time.”

ABCON reacts

In a notice to the BDC operators and directors, the President, ABCON, Aminu Gwadabe, said the CBN’s directive meant that sales of foreign exchange to the BDCs were now suspended till further notice.

Mr Gwadabe also advised the public not to go into panic buying, hoarding and patronising the street traders as the CBN had enough reserves to sustain supplies when the BDCs returned to operations.

“This is to urgently bring to the notice of our members nationwide that following our letter of recommendations to the CBN to grant us market holidays on our bidding days as a proactive and preventive measure on the scourge of the novel COVID-19 epidemic and the ban on all air/land travels, the CBN has granted our request, effective Friday March 27, 2020.”

“There shall be no market days henceforth for a tentative period of two weeks.”

The ABCON president advised members to observe strict guidelines on the preventive measures on the dangers of the COVID-19, by wearing their mask, gloves, and frequent washing of hands.

“We also want to advise members to strictly comply with their regulatory obligations on their daily operations,” he said.

“If you are trading, be cautious not to fall into the hand of security agencies. Don’t be involved in giving black market rates, street trading as doing so might create regulatory breach.”

Mr Gwadabe added that the CBN and the Nigerian Financial Intelligence Unit were tracking large movements of funds within the financial sector, urging members and stakeholders to be cautious.



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