After nearly three years of suspension from the official forex window, the Central Bank of Nigeria (CBN) yesterday resumed a $20,000 daily forex sale to Bureaux De Change (BDCs).
Approved CBN’s records showed that 785 BDCs are eligible for the transactions and are expected to access $20,000 each bringing the daily sales to $15.7 million.
The policy shift, announced by the Director of the Trade & Exchange Department, Dr. Hassan Mahmud, is expected to curb the distortions in the retail segment of the foreign exchange market by deepening dollar liquidity.
Eligible BDCs are mandated to deposit their Naira payments into designated CBN Foreign Currency Deposit Naira Accounts. They must also confirm payment along with other necessary documentation to facilitate disbursement at the appropriate CBN branches in Abuja, Awka, Lagos, and Kano.
The number of eligible BDCs dropped from over 4,500 to the current number, following the apex bank audit of members, assessment of operational digitization, and rendition of returns.
This initiative is part of the efforts to achieve a market-driven exchange rate for the Naira and alleviate the pressures feeding into the parallel market.
This allocation will be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as of the previous trading day, dated February 27, 2024.
This strategy is anticipated to inject much-needed liquidity into the market and stabilize the Naira’s value.
Also, the circular outlines specific guidelines for the BDC operators, stipulating that all BDCs are permitted to sell foreign exchange to end-users at a margin not exceeding one percent (one percent) above their purchase rate from the CBN.
This measure is intended to prevent excessive mark-ups and protect consumers from price exploitation.
The circular reads: “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 of today, 27th February 2024).
According to the circular, all BDCs are allowed to sell to end-users at a margin not more than one percent above the purchase rate from CBN.