CBN Ignores BDC Operators in Forex Interventions as Naira Reverses Gains
- The Central Bank of Nigeria (CBN) has excluded the Bureau de Change operators from its latest FX intervention
- President of the Association of Bureau de Change Operators of Nigeria (ABCON), Aminu Gwadebe, said CBN sold FX only to the banks
- He said the latest intervention was carried out in the forex market, which usually excludes BDCs
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Bureau de Change operators (BDCs) were not part of the latest tranche of FX sales by the Central Bank of Nigeria (CBN) to authorised dealers.
The president of the Association of Bureau de Change Operators of Nigeria (ABCON), Aminu Gwadebe, disclosed this recently.
Source: Getty Images
CBN sidelines BDCs in new dollar sales
He said only commercial banks received the latest intervention by the CBN.
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He disclosed that it is the usual CBN’s intervention at the Nigeria Autonomous Foreign Exchange Market window (NAFEM), which presently excludes BDCs.
The apex bank began selling FX worth about $122.67 million to 46 authorised dealers as part of a major step to stabilize the FX market and the Nigerian currency, the naira.
Punch reports that authorised dealers include the banks and BDCs, which were usually targets of CBN’s FX sales in the past.
CBN issues orders to authorised dealers
According to Omolara Duke, CBN’s director of financial markets, the latest release was part of the bank’s plan to boost stability and reduce volatility in the FX market.
The statement disclosed that the apex bank sold $122.671 million to 46 authorized dealers as part of its plans to promote stability.
In June, ABCON president Gwadebe said that CBN had suspended FX supplies to BDCs since March and was pivoting towards completely liberalising the FX market.
He said the forex break is mainly responsible for the naira's depreciation to N1,563.80 as of Friday, July 12, 2024.
FX reserve rises to a new high
Meanwhile, Nigeria’s external reserves have risen again, hitting $35.05 billion as of July 8, 2024.
Data from the Central Bank of Nigeria indicates that Nigeria’s reserves have increased since July 2024.
Reserves hit the highest for the first time under Tinubu
Analysis shows that the country’s reserves reached their highest level since May 30, 2023, at N35.09 billion, 14 days before the naira devaluation and foreign exchange unification of June 2023.
This is the first time under President Bola Tinubu that the country’s reserves crossed that threshold.
According to analysts, the FX policies of the CBN may have boosted the FX reserve, including financial commitment from Afreximbank and the World Bank via loans.
Naira crashes in the official market
Legit.ng reports that the CBN had sold about $55.17 million to authorised dealers at N1,540 per dollar.
The apex bank urged dealers to ensure that Forex purchases are exclusively used for trade-backed transactions and report the sales after 72 days.
The development comes as the naira reverses its gains on Friday, July 12, 2024, to trade N1,563.80 to a dollar in the official market.
Data from the FMDQ Exchange shows that currency dealers quoted the spot rate of the dollar at a high of N1,586 per dollar and a low of N1,496.
Forex turnover at NAFE plummeted to $126.50 in the official market.
CBN gives exchange rates to clear goods
Legit.ng previously reported the FX rate for Customs duties increased from N1,520 per dollar to N1,558.
The current figure represented an increase of N38 from the previous rate. The naira had crashed during the week to N1,561 to the dollar in the official market.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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Pascal Oparada (Business editor) For over a decade, Pascal Oparada has reported on tech, energy, stocks, investment, and the economy. He has worked in many media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng
Aminu Gwadabe (President at Association of Bureaux de Change Operators of Nigeria) Alhaji Aminu Gwadabe is the president of the Association of Bureau De Change Operators of Nigeria (ABCON) that represents the interests of licensed Bureau de Change operators in Nigeria. Gwadabe comments on issues relating to the foreign exchange market, currency exchange rates, and economic policies in Nigeria over the years.
