Burundi´s central bank has terminated the licenses of all foreign exchange bureaus within the country. The bank claims this was to bring an end to those who were flouting the official exchange rates.
Burundi has had, in fact, a shortage of foreign exchange since 2015, which started around the time President Pierre Nkurunziza said that he would seek a third term in office and which he went on to do.
During this period of time there was a severe political and economic crisis in Burundi. Many felt that Nkurunziza hadn’t done enough to deal with the crisis and this ultimately resulted in the European Union’s suspension of financial support for Burundi.
According to a statement released on Monday by the central bank of Burundi, it had withdrawn licenses for foreign exchange bureaus due to violations of financial rules, namely that the bureaus were trading within an 18% margin of the official exchange rate.
“Licenses given to the foreign exchange offices are withdrawn”
In the statement, the central bank stated that, “the licences that were given to the foreign exchange offices are withdrawn”. Therefore, all licenses have been removed from all foreign exchange bureaus in a sweeping change of legislation.
However, there is a silver-lining for commercial banks because they will be allowed to continue exchanging currencies.
Currency Traders Are Detained
Burundi is clamping down on currency traders. As of the end of 2019, Burundi police had detained more than forty currency traders accused of breaking laws regarding foreign exchange trading margins.
The activity the police are concerned with involves traders obtaining dollars from the neighbouring Democratic Republic of the Congo, then selling them on the black market.
Burundi´s franc has recently strengthened from 2900 to 2500 per dollar. According to traders, this is in part due to slowing imports and travel restrictions placed on China because of the coronavirus.Tags: ban, Banks, currency, forex, politics