BDC Operators Reject CBN Order to Align Forex Rate with I&E Window

The Bureau De Change (BDC) operators in Nigeria have expressed their displeasure and defiance over the new directive from the Central Bank of Nigeria (CBN) to trade foreign currencies at the same rate as the Investor & Exporter (I&E) forex window.

The BDCs claim that the directive is unrealistic and unfair, as they cannot access foreign exchange from the CBN at the official rate and have to source it from other channels at higher rates.

They also say that they would rather sell their foreign exchange at the parallel market, also known as the black market, where they can make more profits

Newsflash Nigeria had reported that the Central Bank of Nigeria (CBN) issued a new directive to the BDC operators in the country to trade foreign currencies at the same rate as the Investor & Exporter (I&E) forex window.

The I&E forex window, also known as the Nigerian Autonomous Foreign Exchange (NAFEX) window, is a market-based platform where foreign exchange buyers and sellers can trade freely and transparently.

The CBN said in a circular dated August 17, 2023, that the new directive was aimed at improving the efficiency of the Nigerian foreign exchange market and ensuring price stability.

The circular, signed by the Director of Trade & Exchange Department, Dr. O.S. Naji, stated that the BDCs should buy and sell foreign currencies within a margin of -2.5 per cent to +2.5 per cent of the I&E forex window weighted average rate of the previous day.

The circular also stated that the BDCs should render periodic reports (daily, weekly, monthly, quarterly and yearly) on their transactions on the financial institution forex rendition system, which has been upgraded by the CBN.

The CBN warned that failure to comply with the new directive and reporting requirements would attract sanctions, which may include withdrawal of the operating licence.

The circular said, “Please, be guided accordingly and ensure compliance.”

However, Newsflash Nigeria learnt that some BDCs were not adhering to the new directive and were still trading foreign currencies at higher rates than the I&E forex window rate.

According to data from the FMDQ Securities Exchange, the naira opened at 761.82/ and closed at 739.52/ on the I&E forex window on Friday, with a total turnover of $130.92m.

But some BDCs who spoke to The PUNCH on condition of anonymity said they were buying and selling dollars at 840/and 865/ respectively on Friday.

They claimed that they could not access foreign exchange from the CBN at the official rate and had to source it from other channels at higher rates.

They also said that they would prefer to sell their foreign exchange at the parallel market, also known as the black market, where they could get higher profits.

One of them said, “We bought and sold dollar for 840/ and 865/ today. CBN is not giving us the dollar, and I did not get it cheap at the official rate so I cannot sell at that rate. How many people have access to that official rate; the dollar is still scarce and expensive.”

Another one said, “The rate we sold today is 865/$. The implication of the new guideline is that if it pays to sell at the black market, I will not sell as a licensed operator.”

The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, however, said that the new directive was in line with the financial reform for the industry and that licensed BDCs should comply with it.

Gwadabe said, “It is an anchor rate for them, if a customer comes, then you look at what is the closing rate for the I&E window and you buy at the -2.5 per cent to +2.5 per cent; the same thing if a customer comes to you, you use the same I&E window.”

He added that the CBN had intelligence reports that some BDCs were accessing foreign exchange from other sources and not reporting their transactions.

He said that the CBN was also ensuring return on rendition for BDCs to report their transactions on the financial institution forex rendition system.

He urged BDCs to abide by the new directive and cooperate with the CBN to improve the foreign exchange market in Nigeria.

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