CBN Resumes Sales of Dollars to BDC Operators
The Central Bank of Nigeria (CBN) has announced its decision to resume the sale of foreign exchange to eligible Bureau De Change (BDC) operators across the country, with each operator entitled to $20,000 worth of foreign exchange.
This move comes after a suspension lasting over two years, initiated by the former CBN governor, Godwin Emefiele, halting the sale of foreign exchange to BDC operators within the forex market segment.
According to a recent circular issued by the CBN’s Director of the Trade and Exchange Department, Hassan Mahmud, the decision aims to address persistent distortions in Nigeria’s retail foreign exchange market and narrow the widening gap in exchange rates.
The circular, titled “Sale of Foreign Exchange to Bureau de Change Operators to Meet Retail Demand for Eligible Invisible Transactions,” states that the allocated foreign exchange will be sold at a rate of N1,301 per dollar, 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.
In the circular, the CBN stated, “Following 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 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 per dollar.”
The circular also stipulates that all BDCs are permitted to sell to end-users at a margin not exceeding one percent above the purchase rate from the CBN.
Furthermore, eligible BDCs are directed to make Naira payments to 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.
The CBN has been implementing various reforms in efforts to stabilize the Naira, including probing and clearing FX backlog, limiting forex for foreign education and medical tourism, increasing BDCs’ minimum share capital, and curbing FX speculators.
