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The Central Bank of Nigeria (CBN),has stopped the sale of foreign exchange to bureaux de change reduce the pressure on the nation’s currency.
Governor of the bank,Godwin Emefiele said the decision will halt the supply of $5.72 billion annually by the central bank to the West African nation’s bureaux de change — a key source of foreign exchange for Nigerians traveling abroad and local businesses.
He said bank will also stop issuing new licenses to currency-trading companies, whose number more than doubled to almost 5,500 over the past five years.
He explained that bank took the step because some bureaus de change have become “greedy” chasing higher profits and their demand for foreign currency is bringing pressure to bear on the naira and the nation’s reserves, Emefiele said.
He informed that the bank will only supply dollars through commercial lenders from now on, he said.
He added:“We have noted with disappointment and grave concern that our bureau de change operators have abandoned the original objective of their establishment, which was to serve retail users who need $5,000 or less,” Emefiele said. “Instead, they have become wholesale dealers” who trade in millions of dollars per transaction, he said.
Emefiele also announced plans to introduce a digital currency, known as the e-naira, by October. It will complement existing types of money and not replace it. The e-naira’s launch will result in some balances at the nation’s lenders being converted to digital currency, he said.
Lagos-based investment bank Comercio Partners Limited,said hoarding of dollars is expected to accompany and exacerbate the kneejerk reaction in the market, as participants gear up for a tighter foreign-exchange market”.
Besides, the Chief Executive of Financial Derivatives Co. in Lagos,Bismarck Rewane, said the decision will enable the bank to close companies that have exploited the market by buying dollars from the central bank at 390 naira and then selling them at 500.
He added:“It will give the central bank enough time to sanitize the bureau-de-change space, leaving only the credible institutions”.
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