The maximum weekly forex sales to Bureau De Change (BDC) operators were, yesterday, removed by the Central Bank of Nigeria (CBN).
The action, contained in a circular to Authorised Dealers and BDC operators, said the action was meant to shore up liquidity in the FOREX market. Dollar scarcity in the market had affected naira exchange rate in recent months, hence the policy review.
The circular, signed by CBN Director, Trade and Exchange, Batari Musa, said the policy review followed the circular of September 26, last year in which a limit of $250,000 was put in place.
“All authorised dealers are hereby informed that the provisions of paragraph (1) of the circular under reference have been reviewed with immediate effect. Consequently, the limit of $250,000 as the maximum weekly forex sales to BDC is hereby removed in order to shore up liquidity in that segment of the foreign exchange market,” he said
Henceforth, authorised dealers are free to sell FOREX to BDCs subject to compliance with the provisions of extant Anti-Money Laundering/Financing Terrorism laws and regulations in the disbursement of forex.
“Furthermore, all transactions between authorised dealers and BDCs as well as the latter and end-users must be supported with appropriate documentation,” he said.
Musa said authorised dealers and BDC operators are to continue to render weekly returns on their transactions to the CBN and other relevant regulatory agencies, failing which appropriate sanctions, including revocation of operating licence, shall be imposed.
The regulator had in September replaced Wholesale Dutch Auction System (WDAS) with Retail Dutch Auction System (WDAS) because of the ineffectiveness of the former in addressing hitches in the forex market.
It also withdrew the licences of 20 bureau de change (BDCs) operators for violating forex rules, an indication that more licences withdrawal may be seen in future, should the violation continue.
Under the RDAS, banks and other authorised dealers place bids on behalf of individual clients who qualify to buy forex at the official auction. The change from WDAS to RDAS allows the authorities to monitor more accurately various sources of forex demand and any potential duplication of forex demand in the system. Banks will remain responsible for all documentation requirements.
Source: The Nation
