Nigeria’s central bank has announced its decision to sell foreign exchange to Bureau De Change operators aimed at rectifying the persisting distortions in the retail segment of Nigeria’s foreign exchange market.
This is according to a memo issued on Tuesday by CBN Director of Trade & Exchange Department, Dr Hassan Mahmud.
According to the memo, the CBN will distribute $20,000 to each eligible Bureau De Change (BDC) operator across the country.
It said the allocation will be sold at a rate of N1,301/$, 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.
This initiative is part of the broader efforts to achieve a market-driven exchange rate for the naira and alleviate the pressures feeding into the parallel market.
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 markups and protect consumers from price exploitation.
Eligible BDCs are mandated to deposit their Naira payments into designated CBN Foreign Currency Deposit Naira Accounts. They must also confirm payment along with other necessary documentation to facilitate disbursement at the appropriate CBN branches located in Abuja, Awka, Lagos, and Kano.
This development comes more than two years after the suspended former CBN governor, Godwin Emefiele, stopped the sales of foreign exchange to BDC operators in that segment of the forex market.
Recall that in an attempt to stabilize the plummeting value of the naira, Nigeria’s apex bank has implemented several noteworthy reforms.
These measures include investigating and resolving the backlog of foreign exchange (FX), imposing restrictions on forex allocation for overseas education and medical treatment, raising the minimum share capital for Bureau de Change (BDC) operators, and clamping down on FX speculators, among other initiatives.