The Central Bank of Nigeria (CBN) has suspended 195 bureau de change (BDC) operators from the Nigerian foreign exchange (forex) market, over their failure to renew their operating licences.
The bank also suspended 19 commercial banks from selling their forex remittances to BDCs, instead mandating them to sell only to travelex, which just sealed a deal with the BDCs.
A circular to the banks showed that only First Bank of Nigeria, one of the most capitalised banks in the industry, was exempted from the apex bank’s big stick.
The naira has seen a dramatic appreciation against the dollar over the past few days, but the turbulence that comes with the latest suspension may see some depreciation in the days ahead.
Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria (ABCON), had initially said its deal with Travelex, a global money transfer agent, would see the naira firm dramatically.
Since the deal was sealed, the naira has appreciated from 490 against the dollar, to 460 on Wednesday, and it was also seen as trading at 550 to the pound on Thursday morning.
CBN had initially barred nine banks from the foreign exchange market on allegations that they were aiding the Nigerian National Petroleum Corporation (NNPC) in hiding over $2.1 billion from the Treasury Single Account (TSA).
That decision saw the naira fall by about nine percent in less than 24 hours to trade at 342 to the dollar – its biggest daily slip since the inception of the new forex regime.
A source within the apex bank said this suspension would not lead to this manner of depreciation earlier recorded.
The announcement is coming on the heels of FirstBank’s strengthened money transfer services as well as its strict compliance to CBN’s rules and directives on the sale of foreign exchange.
The Bank said in a statement on Thursday that it had consistently sold dollars to over 500 BDCs as directed by the CBN to improve dollar liquidity and strengthen the Naira in line with the new flexible foreign exchange policy.
“The CBN’s pronouncement is a testament to the Bank’s strong financial base and its avowed support to the growth and development of a sustainable national economy.”
In a recent statement, Patrick Iyamabo, the Bank’s Chief Financial Officer noted that the Bank will continue to strive to maintain its position as the safest and most respected banking franchise in the country.
“We would continue to leverage our unique ability to grow and capitalize the institution – a testament to our solid track record. Our highest priority remains meeting the financing and banking needs of our customers, by providing world class services, knowledge and expertise to support them, even in very difficult times” he stated.
The Bank remains committed to corporate governance principles and would continue to ensure that dollars sales to the BDCs continue in a seamless manner for ease of distribution to the end users.
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