The Central Bank of Nigeria (CBN) has announced a pivotal decision to resume the sale of foreign exchange, allocating $20,000 to each eligible Bureau De Change (BDC) operator nationwide. This move comes over two years after the suspension of foreign exchange sales to BDC operators in that segment of the forex market by the then CBN governor, Godwin Emefiele.
In a circular issued on Tuesday and signed by Hassan Mahmud, the Director of the Trade and Exchange Department, the CBN stated that this decision is aimed at addressing persistent distortions in the retail segment of Nigeria’s foreign exchange market and narrowing the widening gap in the exchange rate.
The circular, titled “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions,” revealed that the allocation would be sold at a rate of N1,301/$. This rate reflects 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.
The CBN emphasized the ongoing reforms in the foreign exchange market, emphasizing the need for an appropriate market-determined exchange rate for the Naira. The move is seen as an effort to rectify price distortions at the retail end, preventing further impact on the parallel market and addressing the exchange rate premium.
The circular stated, “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.” Eligible BDCs were directed to make Naira payments to designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment along with other necessary documentation.
This decision is part of the CBN’s broader efforts to stabilize the Naira, including reforms such as addressing FX backlog, restricting forex for foreign education and medical tourism, increasing BDCs’ minimum share capital, and curbing FX speculators.
