CBN stops allocation of forex to BDCs

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The Central Bank of Nigeria (CBN) on Tuesday halted the sale of forex to Bureau De Change (BDC) operators, saying the parallel market has become a conduit for illicit forex flows and graft.

CBN governor, Mr. Godwin Emefiele, who disclosed this in a live television broadcast, also said the bank will no longer process applications for BDC licences in the country.

Besides, he said weekly sale of foreign exchange by the CBN will henceforth be conducted by the deposit money banks.

“We are concerned that BDCs have allowed themselves to be used for graft,” Emefiele said.

He said international bodies, including some embassies and donor agencies, had been complicit in illegal forex transactions thus hindering the flow of foreign exchange into the country.

Emefiele further stated that organisations had chosen to channel forex through the black market than use the official Investors and Exporters (I&E) window, called Nafex.

He threatened to deal ruthlessly with banks allowing illegal forex dealers to use their platforms and will report the defaulting international organisations to their regulators.

“We will deal with them ruthlessly and we will report the international bodies,” he said.

The governor also said banks are mandated to “immediately” and transparently sell forex to customers who present the required documents. All banks are to immediately create dedicated tellers for the same purpose.”

Emefiele also disclosed that after the two-day monthly Monetary Policy Committee (PMC) meeting, the committee also resolved to maintain the asymmetric corridor of +100/-700 basis points around the MPR.

The bank also left the Cash Reserve Ratio at 27.5 per cent and Liquidity Ratio at 30 per cent.

The MPR is the rate at which the CBN lends to commercial banks and often determines the cost of borrowing in the economy.

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