CBN Resumes Dollars’ Sales To BDCs
BY EDMOND ODOK – Working round the clock to address current challenges in the foreign exchange market, the Central Bank of Nigeria (CBN) on Tuesday said foreign exchange worth $20,000 will be sold to each eligible Bureau De Change (BDCs) operator in the country.
The policy reversal comes more than two years after the immediate past CBN governor, Godwin Emefiele, suspended the sales of foreign exchange to BDC operators in that segment of the forex market.
Dated Tuesday, February 27, 2024 and signed by the Director, Trade and Exchange Department, Hassan Mahmud, the new circular conveying the apex bank’s decision is titled; “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions”.
According to CBN, the latest move seeks to rectify the persistent distortions in the retail segment of Nigeria’s foreign exchange market while also bridging the widening gap in the exchange rate.
Consequently, the allocation will be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market as of the previous trading day, dated February 27, 2024.
The circular read in parts; “Following the ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the Naira, the Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.
“To this end, the CBN has approved the sale of foreign exchange to eligible Bureau De Change to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as of today, 27th February 2024).
“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one per cent (1 per cent) above the purchase rate from CBN.”
Eligible BDCs were further directed to make Naira payments to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentation to the apex bank for processing.
“All eligible BDCs are directed to make the Naira payment to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentation, for disbursement at the appropriate CBN Branches Abuja, Awka, Lagos and Kano”.
Forefront News notes that frantically pursuing measures aimed at curbing Naira’s free fall, the apex bank has introduced significant reforms towards addressing the currency depreciation challenges.
These policy measures include probing and clearing FX backlog, limiting forex for foreign education and medical tourism, curbing FX speculators, and increasing BDCs’ minimum share capital, among others.
