CBN Resumes Sales of Dollars to BDCs, Sets Dollar Exchange Rate Pricing Limit
- The Central Bank of Nigeria has reinstated the sale of dollars to licenced BDCs in the country following its 2021 ban
- The latest decision is part of the apex bank's move to ensure there is enough liquidity in the market
- It will not be business as usual for BDC operators, as the CBN has set a limit on how a dollar will be priced
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Central Bank of Nigeria (CBN) has resumed the sale of dollars to Bureau De Change (BDC) operators in the country.
The apex bank disclosed this on Tuesday, February 27, 2023, in a statement signed by Hassan Mahmud, CBN’s Director of Trade & Exchange Department.
Source: Facebook
According to the statement, each licenced BDC operator across the country will have access to $20,000 weekly to meet retail demand for forex.
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In 2021, the central bank, in a bid to achieve its mandate of safeguarding the value of the local currency, ensuring financial system stability, and shoring up external reserves, announced the immediate discontinuance of foreign currency sales to BDC operators in the country.
CBN set exchange rate limit
CBN also said that the dollar was sold to each BDC operator at the rate of N1,301/$, which is a lower rate compared to the Nigerian Autonomous Foreign Exchange Market (NAFEM) closing rate of N1,582.94.
However, Mahmud said all BDCs are allowed to sell to end-users at a margin not more than 1% above the purchase rate from CBN.
The statement reads:
“Following the on-going reforms in the foreign exchange market, aimed at achieving an appropriate market determined exchange rate for the Naira, the Central Bank of Nigeria (CBN) has observed the 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 (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 at today, 27th February 2024).
“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one percent (1%) above the purchase rate from CBN.
“All eligible BDCs are directed to make the Naira payment to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentations, for disbursement at the appropriate CBN Branches Abuja, Awka, Lagos, and Kano).”
CBN releases new BDC operational guidelines
Earlier, Legit.ng reported that the Central Bank of Nigeria (CBN) has announced rules that will see the end of the sale of dollars on the street in Nigeria.
The New guidelines issued for BDC operators are aimed at streamlining their operations and enhancing regulatory oversight.
CBN hopes these measures will help create stability for the naira and transparency of the foreign exchange market.
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Source: Legit.ng
