The Central Bank of Nigeria has revealed its plan to sell $20,000 worth of foreign exchange to every eligible Bureau De Change operator nationwide.
The apex bank revealed this information in a recent circular that was issued and signed by the Director of the Trade and Exchange Department, Hassan Mahmud, on Tuesday.
The circular titled, “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions” highlighted the intention to correct the existing imbalances in Nigeria’s foreign exhange market retail sector and reduce the exchange rate disparity.
Reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market on February 27, 2024, the allocation will be sold at a rate of N1,301/$.
The circular stated, “In light of the ongoing reforms in the foreign exchange market to achieve a market-determined exchange rate for the Naira, the Central Bank of Nigeria has noted the persistent price distortions at the retail level, impacting the parallel market and widening the exchange rate premium."
It is also mentioned that all BDCs have the permission to sell to end-users at a margin NOT MORE THAN one per cent (1 per cent) above the purchase rate from CBN.
To comply with the directive, eligible BDCs must make Naira payments to the designated CBN Foreign Currency Deposit Naira Accounts and submit proof of payment, along with other essential documentation.
The CBN has been working tirelessly to prevent the naira's free fall by implementing various reforms to tackle Naira depreciation, such as investigating and clearing FX backlog, restricting forex for foreign education and medical tourism, raising BDCs’ minimum share capital, and controlling FX speculators.
Recall that the former CBN governor, Godwin Emefiele led the cessation of foreign exchange sales to BDC operators in that segment of the forex market for more than two years.
