CBN bans sales of forex to BDCs, retains benchmark interest rate at 11.5%

CBN Gov. Godwin Emefiele

The Central Bank of Nigeria (CBN) says it has stopped sale of foreign exchange (FX) to Bureau De Change (BDCs) operators in the country, reports Thecitypulsenews.

Godwin Emefiele, governor of the apex bank, announced this at the end of the monetary policy committee meeting in Abuja on Tuesday.

Emefiele said the apex bank received about 5,000 applications every month for BDC registration, adding that the operators are making efforts to dollarise the Nigerian economy.

The CBN governor said BDC operators have become a conduit for illegal financial flows working with corrupt people to conduct money laundering in Nigeria.

“They have turned themselves away from their objectives,” he said.

“They are now agents that facilitate graft and corruption in the country.

“We cannot continue with the bad practices that are happening at the BDC market.”

Emefiele added that there is evidence of prevailing ownership of several BDCs by the same promoters to procure multiple FX from the central bank.

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“Several international organisations, embassies patronise BDC through illegal forex dealer to fund their institutions,” he added.

“We will deal ruthlessly with Nigerian banks that deal with illegal BDCs and we will report foreign organisations patronising them.”

He said the CBN will henceforth channel weekly allocations of dollar sales to commercial banks to meet legitimate FX demands.

He also mandated banks to sell forex to every customer.

Meanwhile, the monetary policy committee of the CBN has also announced its decision to retain the monetary policy rate (MPR) at 11.5 percent.

At its last meeting, the committee members also voted to retain MPR at 11.5 percent – the rate it had been since September 2020.

Godwin Emefiele, governor of the apex bank, announced the committee’s decision on Tuesday at the end of a two-day meeting at the CBN headquarters in Abuja.

“The MPC made the decision to hold all policy parameters constant. Committee thus decided by a unanimous vote to retain monetary policy rate at 11.5%,” Emefiele said.

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“MPC voted to retain asymmetric corridor +100 -700 basis points. It also voted to retain cash reserve ratio at 27.5% and retain liquidity ratio at 30%.”

The action of the CBN monetary policy committee is in line with the recommendation of the IMF.

In its latest World Economic Outlook (WEO) released on Tuesday, IMF advised central banks to look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics.

“Clear communication from central banks on the outlook for monetary policy will be key to shaping inflation expectations and safeguarding against premature tightening of financial conditions,” IMF said.

CBN bans sales of forex to BDCs, retains benchmark interest rate at 11.5%
CBN Gov. Godwin Emefiele

The Washington-based institution projected growth of 2.5 percent for Nigeria in 2021 on the slow rollout of vaccines.