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Business News of Thursday, 31 August 2023


N925/$: CBN sends strong message to BDC operators over guideline violations, Naira crash

Acting Governor of the Central Bank of Nigeria, Folashodun Shonubi Acting Governor of the Central Bank of Nigeria, Folashodun Shonubi

Recent developments suggest that Bureau De Change operators may be on a war path with the Central Bank of Nigeria over market infringement.

Reports say there is an engagement between the apex bank and BDC operators made up of Bureau de Change of Nigeria (ABCON) members over yet-to-be-fulfilled expectations.

CBN had engaged the BDC operators openly and privately and criticized them for what it felt was sabotage and market manipulation.

The operators have dismissed the allegations as misplaced by the market regulator. Despite CBN holding over 5,000 registered operators responsible for the naira crash, ABCON has regularly rejected the narrative, asking the CBN to do the hard job of sanitizing the system.

On Tuesday, August 29, 2023, the ABCON president, Aminu Gwadabe, stated that the inability of the CBN to differentiate between the activities of speculators and registered ABSON members is troubling.

The narrative may resurface on Thursday, August 31, 2023, after the deadline by CBN that ABCON should enforce its recently issued guidelines.

The apex bank announced fresh guidelines to the operators to boost the efficiency of the Nigeria Forex market.

CBN alleges BDCs violated its guidelines

The document contains some reporting and trading rules to bring the market sanity.

The circular emphasises that BDC operators' trading margin is pegged at -2.5% to +2.5 % of the Nigerian Foreign Exchange Market window's previous day's weighted average.

CBN's circular threatened licence revocation over failure to comply with the new directives by BDC operators.

The Guardian reports a 19% disparity between the black and official foreign exchange markets.

According to data from FMDQ, as of August 30, 2023, the naira exchanged for N925 at the black market and N775.34 at the official market.

Analysts believe the move is defeating the foreign exchange reform of President Bola Tinubu's administration.

They say that if the CBN does not wield the big stick soon, the naira will crash to as low as N1,000 per dollar in the parallel market and above N800 in the official market.