CBN Moves To Rescue The Naira

The Central Bank of Nigeria has removed the $250,000 weekly foreign exchange sales limit placed on bureau de change operators in the country, according to the latest information from the bank.

The development came one week after the Governor, CBN, Mr. Lamido Sanusi, vowed to address the widening gap between the naira-dollar exchange rates in the official market and parallel market.

The Monetary Policy Committee, which rose from a two-day meeting in Abuja last week, had raised the alarm over the widening gap between the naira-dollar exchange rates in both segments of the markets.

The committee expressed concern about the widening gap between the official and the BDC exchange rates, noting that this could precipitate speculations and round-tripping.

The CBN governor said though the BDCs represented a small component of the foreign exchange market, the widening spread appeared to have led to creeping increases in core inflation.

However, in a circular dated January 24 to all authorized foreign exchange dealers and BDCs, posted on the CBN’s website, the central bank stated that authorized dealers could now sell more than $250,000 weekly limit to BDC operators.

The circular, signed by the Director, Trade and Exchange Department, Mr. Batari Musa, reads, “Further to our circular dated September 26, 2013, we write to inform all authorized dealers and the general public that the provisions of paragraph one of the circular under reference has been reviewed with immediate effect.

“Consequently, the limit of $250,000 as the weekly foreign exchange sale to a BDC is hereby removed in order to shore up liquidity in that segment of the foreign exchange market.

“Authorized dealers are therefore free to sell foreign exchange to BDCs subject to compliance with the provisions of extant AML/FT laws and regulations in the disburse of forex.

“Furthermore, all transactions between authorized dealers and BDCs as well as the latter and end-users must be supported with an appropriate documentation. In addition, authorized dealers and BDC operators are to continue to render weekly returns on their transactions to the CBN and other regulatory agencies, failing which appropriate sanctions, including revocation of operating licences, shall be imposed.”