24 April 2014
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Monday, 30 September 2013 18:18

Operators react to Sanusi’s suspension of WDAS forex market Featured

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Some operators of Bureau De Change (BDC), in Nigeria has expressed divergent views on the suspension of Whole Dutch Auction System (Whole Dutch Auction System (WDAS), by Central Bank of Nigeria(CBN) and the  reinforcement of Retail Dutch Auction System(RDAS).

According to Yinusa Onireti, Head of Operations Natimi BDC Limited, Lagos, the suspension cannot be coming at a better time than.  “The point is that there are so much illegality in the system particularly by the wealthy ones.  So with this suspension of the Wholesale Dutch Auction System(WDAS), and the reinforcement of Retail Dutch Auction System(RDAS) most of these illegalities will be curtailed. The CBN governor decision is good if given a critical look.  It impact on the economy will equally be positive.

“What Sanusi is trying to do is to discourage illegality, reduce the volume of money in the system, increase and encourage local production, manufacturing, agriculture and what have you.

The action to suspend the old for the new is to check money laundering and use of cash in the system. Corruption is also the target, the old system encourage the purchase of large sum of USD($1m) per week which has been reduced to $250k maximum per week. Personally, is a right step in the right direction though some people might not agree or see it in that light.”

For Ndudim Nwankwo, Senior Lecturer, Oxbridge College: the reinforcement of RDAS is a welcome development. “That was what it used to be in the past. What I am not sure of it is implication on the economy. It could be negative or positive. This is Nigeria, some will embrace it, while some will not want it to see the light of the day.”   

The Central Bank of Nigeria (CBN) disclosed plans to withdraw the operating licenses of 20 Bureau De Change(BDC) operators over allegation of money laundering activities.

It also suspended the wholesale Dutch Auction System (WDAS) and re-introduced the Retail Dutch Auction (RDAS).

The CBN stated this in a circular titled, Development in the Foreign Market,”

According to Mallam Lamido Sanusi Lamido, the withdrawal is as a result of illegal activity of the BDC operators which is responsible for the volatility observed in the BDC and parallel segment of the FOREX  market.

He said: Why are Nigerians changing cash to dollars? To buy goods? To pay medical bills? We started looking at the numbers and what we can discover? There are banks that were importing cash in millions of dollars and were selling to BDCs. We went to those BDCs to show us what they did with the money and they could not.

The CBN governor added that Nigeria has overtaken Russia as the biggest importer of the US dollar.  It import more US dollar in cash than any other country in the world. Minimum bid by the authorized dealers shall be $100,000,00, saying that just like the WDAS, auction at the newly introduced RDAS would be held every Monday and Wednesday.

Meanwhile the existing limit of  $40,000 per annum on naira debit and credit has been reviewed upward to$150,000 per annum subject to monthly rendition of returns by authorized dealer banks and card issuers (Mastercard and visa), to the CBN. The settlement of the cards shall continue to be with inter bank funds.

The importation of the foreign currency banknotes by dealers shall henceforth be subject to a prior approval by the CBN. Any authorized dealer intending to import foreign currency cash required to forward an application, stating the amount and purchase to the Director, Trade and Exchange Department, CBN for consideration.

Importers intending to pay for import of non-regulated products valued not more than $250,000 per annum using telegraphs transfer shall only complete form ‘m’online with pro-forma invoice.”




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