Pricing goods and services in foreign currencies is prohibited and punishable by the law, and any culprit will be held accountable, the National Bank of Rwanda (NBR) – the country’s central bank, and financial sector regulator – has reminded the public.

This is one of the reminders contained in a public notice on forex transactions that the bank published on its X account on December 30. It was digitally signed by its Governor John Rwangombwa, on December 29, 2023.

It indicated that reference was made to a provision in the law of September 23, 2017, governing the Central Bank as amended to date, stating that all monetary obligations or transactions entered into or made in Rwanda are considered to be expressed and settled in Rwandan francs unless otherwise provided for by the law or it is lawfully agreed upon between the parties.

Also in the afore-mentioned notice, NBR pointed out that non-licensed persons (such as hotels, duty free shops, casinos, travel or tourism companies, international schools, among others) that, in their businesses regularly dealing with non-residents, they are authorised to receive foreign currency under the conditions mentioned in a directive on transaction in foreign currency by non- licensed intermediaries.

Other non-licensed persons shall apply to the Central Bank for authorisation to transact in foreign currency as per the requirements set in the directive, it pointed out.

The notice follows concerns around scarcity of the US Dollar in the country, as well as the depreciation of the local currency.

ALSO READ: Central bank governor speaks out on dollar scarcity, de-dollarisation talk

On November 27, while presenting the central bank’s annual report for the financial year 2022/2023 report to Parliament in a joint plenary session, Rwangombwa said that there was no complete lack of the US Dollar in Rwanda, but limited availability of the currency had put pressure on the exchange market.

He added that de-dollarisation, or reducing reliance on the dollar for international transactions, was still far from reality.

During the session, some MPs talked about the expensiveness and shortage of the US dollars, and the difficulty in getting them from forex bureaus, wanting to know what the central bank was doing to address the issue.

In response, Rwangombwa told parliamentarians that the central bank carried out an inspection of forex bureaus’ operations and suspended six forex bureaus, while others were charged fines in order to prevent malpractices at the currency exchange market.

Meanwhile, according to the central bank report, the Rwandan Franc depreciated significantly by 8.76 per cent against the US Dollar in 2022/23, a faster decline than the 3.78 per cent registered in 2021/22, according.

This depreciation can be explained by the widening trade deficit, but also by the strengthening of the dollar following the US Federal Reserve’s monetary policy tightening, it indicated.

It’s prohibited to conduct foreign exchange business without license

The business of buying or selling foreign currency is only done by intermediaries licensed by NBR to do so. These include banks, deposit taking microfinance institutions and Forex Bureaus, the notice indicated.

Transparency in foreign currency exchange market

In a bid to streamline the forex bureau exchange market, NBR reminded the public "to always ensure that the Forex Bureau you are about to do business with, has a valid license granted by the National Bank of Rwanda”, to always buy or sell currencies using the exchange rates displayed on the notice board.

Again, it said that whoever is going to buy or sell any foreign currency must present his/her identification card or valid passport, and that whoever buys or sells any foreign currency must request for a receipt clearly showing the transaction details.

It also urged the public to report any case whereby the forex bureau refuses to provide the foreign currency while it has such currency.

Sanctions

The central bank reminded the public that sanctions await any person involved in illegal practices on foreign exchange market.

Any person who, by any means, illegally sells or exchanges, national or foreign currency, commits an offence.

Upon conviction, he/she is liable to imprisonment for a term of not less than six months and not more than two years, or a fine of not less than Rwf200,000 but not more than three Rwf3 million, or only one of these penalties as provided for by the law of August 30, 2018, determining offences and penalties in general as amended to date (on December 4, 2023).

Any person selling or pricing goods or services in foreign currency without authorisation shall be punishable oy the seizure and confiscation of the amount involved in that transaction as per article 34 of the regulation of April 4, 2022, governing foreign exchange operations.

"When illegal foreign exchange activity is noted, please report promptly to the National Bank of Rwanda (NBR) or Law Enforcement Authorities (Rwanda National Police, Rwanda Investigation Bureau or Local Authorities,” the notice reads in part.