The Central Bank of Nigeria has announced its decision to sell foreign exchange worth $20,000 to each eligible Bureau de Change operator across the country.
Jerrymusa.com reports that this occurred more than two years after Godwin Emefiele, the suspended former governor of the CBN, halted the selling of foreign currency to BDC operators in that particular forex market segment.
CBN Targets to Meet Retail FX Demand
This was revealed by the top bank in a fresh circular that was released on Tuesday and bears the signature of Hassan Mahmud, Director of the Trade and Exchange Department.
The goal of the action, according to the circular titled “Sale of Foreign Exchange to Bureau de Change Operators to Meet Retail Demand for Eligible Invisible Transactions,” was to close the growing exchange rate gap and address enduring distortions in Nigeria’s retail foreign exchange market.
It stated that the allocation will be sold for N1,301/$, which reflects the current transaction execution band rate that is lower at the Nigerian Autonomous Foreign Exchange Market as of February 27, 2024, the previous trading day.
“The Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which are feeding into the parallel market and further widening the exchange rate premium,” the circular stated.
“Following the ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the Naira,”
To accommodate the demand for invisible transactions, the CBN has authorised the sale of foreign exchange to qualified Bureaus de Change.
Each BDC is to purchase $20,000 at a rate of N1,301/$-, which is the lower band rate of spot transactions that were completed at NAFEM for the prior trading day.
“Selling to end users at a margin not more than one per cent (1%) above the purchase rate of CBN is permitted for all BDCs.
“Additionally, it instructed qualified BDCs to deposit Naira into the appropriate CBN Foreign Currency Deposit Naira Accounts and to provide proof of payment along with other required Document
“for payment, the disbursement will be at the relevant CBN Branches in ABUJA, AWKA, LAGOS, and KANO.”
In a desperate attempt to stop the naira’s fast decline, the CBN has implemented many important reforms to address naira depreciation.
including examining and resolving the backlog in foreign exchange, restricting foreign exchange used for medical and educational travel, raising the minimum share capital required of BDCs, and discouraging FX speculators, to name a few.