Apparently to stabilize the Naira and narrow the gap between the official and unofficial foreign exchange rates, the Central Bank of Nigeria (CBN) has formalised dollar sales to Bureau De Change (BDCs) operators after a three-year break.
On July 27, 2021, the CBN under then Governor Godwin Emefiele, discontinued the sale of foreign exchange to BDCs accusing them of trading FX wholesale that amounts greater than USD 5000, in contravention of their licences, and Nigeria’s FX regulations.
Emefiele had argued then that the BDCs turned themselves away from their objectives and rather became agents that facilitate graft and corruption in the country.
However, after several appeals, the apex bank has made a U-turn, as each BDC will be eligible to buy $20,000 weekly from the apex bank at a rate of N1,301/$1, according to a circular published Tuesday by the apex bank.
The BDCs in turn are allowed to sell to end-users at a margin not more than one percent above the purchase rate from CBN.
In the CBN’s circular dated February 27, 2024, and signed by Hassan Mahmud director, trade and exchange department, the apex bank said it has observed the continuous price distortions at the retail end of the market, which is feeding into the parallel market end further widening the exchange rate premium.
“To this end, the CBN has approved the sale of foreign exchange to eligible Bureau De Change (BDCs) 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 at today, 27th February 2024),” the circular said.
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).
Naira slumps again, sheds N15 against dollar to trade at N1,169/$1 in official window
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