CBN Resumes $20,000 Daily Forex Sale to 785 BDCs After 3 Years of Suspension

The CBN has announced the resumption of the $20,000 daily forex sale to Bureaux De Change (BDCs) after three years of suspension from the official forex window.

According to the approved CBN’s records, 785 BDCs are eligible for the transactions and are expected to access $20,000 each, bringing the daily sales to $15.7 million.

This reform was announced by Dr Hassan Mahmud, the Director of the Trade & Exchange Department, and this policy is expected to reduce the distortions in the retail segment of the foreign exchange market by deepening dollar liquidity.

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Eligible BDCs must deposit their Naira payments into designated CBN Foreign Currency Deposit Naira Accounts. They must also confirm payment and other necessary documentation to facilitate disbursement at the appropriate CBN branches in Abuja, Awka, Lagos, and Kano.

However, the number of eligible BDCs dropped from over 4,500 to the current number following the apex bank audit of members, assessment of operational digitisation and rendition of returns.

This initiative is part of the efforts to achieve a market-driven exchange rate for the naira and alleviate the pressures feeding into the parallel market.

This allocation will be sold at 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 1% above their purchase rate from the CBN.

This measure is intended to prevent excessive markups 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 $20,000 will be sold to each BDC at N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as of today, February 27, 2024).

According to the circular, all BDCs are allowed to sell to end-users at a margin not more than 1% above the purchase rate from CBN.

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Back Story

In the recent happenings in stabilising the Naira, the Central Bank of Nigeria has reportedly sold over $300 million to Deposit Money Banks in the last two weeks as ongoing measures to strengthen the naira versus dollar exchange rate tussle that has continued to plummet the prices of things in the country.

However, this announcement was disclosed by the Association of Corporate Treasures of Nigeria in an advisory memo distributed to its members and some news outlets nationwide.