The National Bank of Rwanda (NBR) has issued a strong warning against unauthorized foreign currency operations, unveiling significant financial penalties for any individual or business found pricing goods or services, or transacting in foreign currency without prior approval.
In a public notice released on June 16, 2025, the Rwandan central bank announced the enforcement of Regulation No. 89/2025, which amends the existing Regulation No. 42/2022 governing foreign exchange activities.
The amended regulation was published in the Official Gazette on May 30, 2025.
Under the new sanctions, anyone caught pricing in foreign currency without authorization will face a fine of Rwf5 million for the first offense and Rwf10 million for subsequent violations.
Similarly, unauthorised transactions in foreign currency will attract penalties equivalent to 50% of the transacted amount for the first instance and 100% for repeat offenses.
Entities or individuals found participating in foreign currency auctions without clearance from the central bank will be fined 50% of the total auctioned amount.
However, the notice makes exceptions for specific transactions such as payments related to exports or imports, or those involving hotels, casinos, duty-free shops, international schools dealing with non-residents, and travel and tourism agencies.
"The NBR urges all individuals and businesses to refrain from engaging in the above activities without appropriate authorization," said Governor Soraya M. Hakuziyaremye in the signed statement.
“We will continue to address unlawful foreign currency operations in collaboration with law enforcement and other stakeholders.”
Economists say the decision shows that Rwanda is seeking to protect the role of the Rwanda Franc as the country’s primary currency.
Allowing widespread use of the Dollar risks eroding monetary sovereignty. This occurs when businesses and individuals begin to substitute the local currency with a foreign one, reducing the central bank’s ability to manage inflation, interest rates, and credit conditions effectively.
Over the past year, the Rwandan franc has depreciated against the US Dollar, falling from about Rwf1,312 to Rwf1,433 per dollar — a drop of nearly 9 percent.
This weakening has made imports more expensive, driving up the cost of goods such as fuel, electronics, and pharmaceuticals.
The depreciation also increases the likelihood of inflation, as local businesses pass on higher import costs to consumers.
Against the Uganda Shilling, the franc has lost even more ground, declining from around Shs2.83 to Shs2.50 per franc — a 13 percent slide.
This negatively affects Rwandan traders and exporters operating in the Ugandan market, who now receive less value for their goods.
It also diminishes the value of cross-border remittances and may discourage informal trade that has long played a role in the border economy.
The weakening franc adds context to the National Bank of Rwanda’s new crackdown on unauthorized foreign exchange transactions.
By enforcing strict fines and regulations, the central bank hopes to stem speculative currency activity, preserve monetary stability, and rebuild confidence in the franc.
These moves are also designed to limit the erosion of purchasing power for both consumers and businesses as the currency faces regional and global pressures.
Additionally, unregulated dollar use increases demand for the foreign currency, which can put downward pressure on the franc and introduce exchange rate instability.
Such instability discourages investment, creates uncertainty in pricing, and can lead to imported inflation as the cost of goods rises with a weaker franc.
Over time, this can further fuel the shift to foreign currencies, creating a feedback loop of depreciation and reduced confidence in the local currency.
The crackdown is also intended to prevent distortions in the financial system. When foreign currency transactions happen outside official channels, they often escape regulatory oversight and taxation, weakening public revenues and increasing the risk of illicit capital flows.
By enforcing penalties on unauthorized dollar transactions, Rwanda’s central bank is aiming to reinforce confidence in the franc, maintain economic order, and retain control over domestic financial stability.
The central bank emphasized that the penalties are intended to safeguard the Rwandan franc and ensure macroeconomic stability.
It also encouraged the public to report any illegal activity to the relevant authorities including the Rwanda Investigation Bureau (RIB), the police, or local authorities.