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The Central Bank of Nigeria (CBN) has recently announced new guidelines to counter currency speculators and address the challenges faced by the Nigerian economy. This move aims to stabilize the currency, reduce inflation, and foster economic growth.
One of the significant changes introduced by the CBN is the re-entry of Bureau De Change operators (BDCs) into the currency exchange business.
This decision comes after a halt imposed by the former CBN Governor due to concerns of terrorism funding. The Acting Governor of the apex bank, Folasodun Shonubi, has now reinstated their activities with a new procedural guideline.
The new framework outlines that the spread on buying and selling by BDC operators should fall within a permissible range of -2.5% to 2.5% of the Nigerian Foreign Exchange market window’s weighted average rate from the previous day.
This measure aims to provide greater stability and transparency to exchange rate fluctuations, benefiting both BDC operators and the general public.
Additionally, BDC operators are now required to submit periodic financial reports through the upgraded Financial Institution Forex Rendition System (FIFX), enhancing oversight and ensuring greater accountability.
Benefits of the New Guidelines
The implementation of these new guidelines is expected to have several positive impacts on the Nigerian economy.
Firstly, it will address the surge in inflation caused by the currency floatation, leading to a high cost of living. By streamlining and improving the BDC operations, the CBN aims to reduce the gap between the official exchange window and the parallel market, thereby stabilizing the currency and curbing currency speculation.
Moreover, involving BDC operators in the retail business of currency exchange, especially through allocations from International Oil Companies and other entities involved in dollar business in the country, will address liquidity challenges.
This, in turn, will contribute to a more vibrant economy and facilitate easier access to foreign exchange for businesses and individuals.
Conclusion
The Central Bank of Nigeria’s new guidelines for Bureau De Change operators mark a significant step towards battling currency speculators and boosting the Nigerian economy. By streamlining operations, enhancing oversight, and fostering greater transparency, the CBN aims to stabilize the currency, reduce inflation, and promote economic growth. These measures are poised to benefit both BDC operators and the general public, contributing to a more robust and well-regulated foreign exchange market in Nigeria.
