CBN confronts currency speculators with new guidelines for BDCs

The Central Bank of Nigeria (CBN) has intensified efforts to battle currency speculators and has brought back Bureau De Change operators (BDCs), with a new guideline to checkmate their operators.

The nation’s currency is currently facing serious problems since it was floated against the dollar, causing problems in the economy with a surge on inflation leading to a high cost of living.

Also, there are concerns of floating the Naira against the American dollar, which has led to the dollarisation of the economy and currency speculation. This development, findings have shown, has been creating a wide gap between the official exchange window and the parallel market.

But, the President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said in a media that Nigeria’s currency problems could be solved if the CBN factor in their colleagues to get involved in the currency business.

“The BDC operators must be involved in the retail business of currency exchange. They should get allocation from the International Oil Companies and others who do dollar business in the country, to solve liquidity problems,” he said.

Recall, the BDCs were, before now, officially halted from foreign exchange business, by former Governor of the CBN, Godwin Emefiele, who cited concerns of ‘terrorism funding’, but the Acting Governor of the apex bank Folasodun Shonubi has brought their activities back with a stiff procedural guideline.

The announcement, made on August 17, 2023, outlines key measures to streamline and improve the BDC operations.

Under the new framework, the spread on buying and selling by BDC operators is set to fall within a permissible range of -2.5 per cent to +2.5 per cent of the Nigerian Foreign Exchange market window’s weighted average rate from the previous day.

This move is expected to provide more stability and transparency to exchange rate fluctuations, ultimately benefiting both BDC operators and the general public.

Another significant alteration is BDC operators’ mandatory submission of periodic financial reports.