The Central Bank of Nigeria (CBN) has announced the commencement of foreign exchange sales to eligible Bureau De Change (BDC) operators across the nation, with each operator set to receive $20,000.
This decision comes after more than two years since the former CBN governor, Godwin Emefiele, halted the sales of foreign exchange to BDC operators in that segment of the forex market.
In a new circular issued and signed by the Director of the Trade and Exchange Department, Hassan Mahmud, on Tuesday, the apex bank disclosed its intention to rectify the persisting distortions in the retail segment of Nigeria’s foreign exchange market and narrow the widening gap in the exchange rate.
According to the circular titled, “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions,” the allocation will be sold at a rate of N1,301/$, 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 stated, “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.”
The circular further directed eligible BDCs to make Naira payments to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, along with other necessary documentation, for disbursement at the appropriate CBN Branches in ABUJA, AWKA, LAGOS, and KANO.
In its efforts to stabilize the free fall of the naira, the CBN has implemented several significant reforms, including probing and clearing FX backlog, limiting forex for foreign education and medical tourism, increasing BDCs’ minimum share capital, and curbing FX speculators, among others.
Details to follow…
