February 11, 2020 / 8:18 AM / 12 days ago

Burundi central bank bans foreign exchange bureaus for flouting official rates

NAIROBI (Reuters) - Burundi’s central bank has suspended the licenses of all foreign exchange bureaus in the central African nation, saying the move was aimed at weeding out those flouting official exchange rates.

Burundi has experienced a shortage of foreign exchange since 2015 after a political crisis that started when President Pierre Nkurunziza announced in April that year that he would seek a third term in office. He went on to win the election the following July.

The European Union suspended financial support to Burundi in 2016, saying Nkurunziza had not done enough to resolve the political and economic crisis.

Burundi’s central bank said in a statement late on Monday it had withdrawn licenses for foreign exchange bureaus for violating rules that allow them to trade currency within an 18% margin of the official exchange rate of 1850 Burundi francs per dollar.

“The licenses which were given to the foreign exchange offices are withdrawn,” the central bank said in the statement seen by Reuters on Tuesday, adding the ban would take effect on Feb.15. 

The bank said commercial banks would however be allowed continue exchanging currencies.

Police briefly detained more than 40 money traders in late 2019, accused of violating the foreign exchange trading margins.

Typically traders turn to limited dollar supplies from neighboring Democratic Republic of Congo, which they were selling on the black market.

The franc has appreciated to 2,500 per dollar from 2,900 in recent days, and traders said this would continue gaining ground due to traders slowing imports, in part due to travel restrictions to China due the coronavirus epidemic.

Editing by George Obulutsa; Editing by Kirsten Donovan

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