The Central Bank of Nigeria (CBN) has made a firm decision to close the growing exchange rate difference in an effort to address the enduring inefficiencies in the retail sector of Nigeria’s foreign currency market.
Dr. Hassan Mahmud, the Director of Trade & Exchange Department, released a fresh circular on behalf of the CBN announcing the allocation of $20,000 to all qualified Bureau De Change (BDC) operators nationwide.
This project is a component of larger attempts to relieve pressures fueling the parallel market and establish a market-driven exchange rate for the Naira. This allocation will be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as of the previous trading day, dated February 27, 2024. This strategy is anticipated to inject much-needed liquidity into the market and stabilise the Naira’s value.
Also, the circular outlines specific guidelines for the BDC operators, stipulating that all BDCs are permitted to sell foreign exchange to end-users at a margin not exceeding one percent (1%) above their purchase rate from the CBN. This measure is intended to prevent excessive mark-ups and protect consumers from price exploitation.
The circular reads: “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.
Eligible BDCs are mandated to deposit their Naira payments into designated CBN Foreign Currency Deposit Naira Accounts. They must also provide confirmation of payment along with other necessary documentation to facilitate disbursement at the appropriate CBN branches located in Abuja, Awka, Lagos, and Kano.
