CBN Resumes Sales of Dollars to BDCs After Attack by DSS and EFCC

CBN has resumed sales of dollars to BDCs.

Newsone Nigeria reports that the Central Bank of Nigeria led by Yemi Cardoso, has announced its decision to sell foreign exchange worth $20,000 to each eligible Bureau De Change operator across the country.

This online news platform understands that the development is coming a week after the Nigerian security operatives including officials of the Economic and Financial Crimes Commission (EFCC) last Wednesday raided some Bureau De Change outlets in the Federal Capital Territory, Abuja, arresting over 100 operators as the country’s currency slipped further.

The resumption of the sales of dollars to BDCs is also coming 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.

CBN disclosed this in a new circular issued and signed by the Director, Trade and Exchange Department, Hassan Mahmud, on Tuesday, February 27, 2024.

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.”

It further directed eligible BDCs to make Naira payments to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentation.

“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,” it added.

Meanwhile, News-One reports that in frantic efforts to save the free fall of the naira, the CBN has made a number of significant reforms towards addressing Naira depreciation, such as probing and clearing FX backlog, limiting forex for foreign education and medical tourism, increasing BDCs’ minimum share capital, and curbing FX speculators, among others.