The Central Bank of Nigeria has continued with more of its foreign exchange reforms with the sales of $20,000 to each qualified Bureau De Change (BDC) operator across the nation.
This move marks a pivotal shift from the stance taken more than two years ago by the then CBN Governor, Godwin Emefiele, who halted forex sales to BDC operators in a bid to stabilize the forex market.
The policy change was communicated through a circular released on Tuesday, bearing the signature of Hassan Mahmud, the Director of the Trade and Exchange Department at the CBN.
This decision is seen as a strategic effort by the apex bank to enhance liquidity in the foreign exchange market and to stabilize the naira against other major currencies.
The suspension of forex sales to BDC operators by Emefiele was initially intended to curb the misuse of forex and speculation in the market, which was believed to contribute to the volatility of the naira.
The circular titled, “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions” said the move aimed at rectifying the persisting distortions in the retail segment of Nigeria’s foreign exchange market and bridging the widening gap in the exchange rate.
It said the allocation will be sold at a rate of N1,301/$, 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.
The circular read, “Following the 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 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 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 of today, 27th February 2024).
“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.
“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 documentation, for disbursement at the appropriate CBN Branches ABUJA, AWKA, LAGOS and KANO.”