Market News
Forex Crisis: CBN Douses Tension, Sells Forex To BDCs At N1,450/$1 - NEW TELEGRAPH
by Tony Chukwunyem
…Naira strengthens to N1,566.82/$1
After an interval of about three months, the Central Bank of Nigeria (CBN) has announced a fresh sale of foreign exchange to Bureaux De Change (BDC) operators.
In a circular posted on its website yesterday, which was signed by Aliyu Mahdi, for the Acting Director, Trade and Exchange Department, the apex bank said it had approved the sale of the sum of $20,000 to each eligible BDC at the rate of N1,450/$1, adding that the rate represents the lower band of the trading rate at the Nigerian Autonomous Foreign Exchange Market (NAFEM) in the previous trading day.
According to the circular, the CBN’s latest forex sale to the BDCs is in response to, “continued distortions in the retail end of the market, which is feeding into the parallel market” and further widening the exchange rate premium.
The circular also said that BDCs are allowed to sell to eligible end-users at a margin, not more than 1.5 percent, above the purchase rate from CBN.
The circular read: “Following the ongoing reforms in the foreign exchange market, with the objective of achieving an appropriate market determined exchange rate for the naira, the Central Bank of Nigeria (CBN) has observed the continued distortions in the retail end of the market, which is feeding into the Parallel market and further widen the exchange rate premium.
“To this end, the CBN has approved the sales of FX to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions.
The sum of $20,000 is to be sold to each BDC at the rate of N1,450/$ (representing the lower band of the trading rate at NAFEM in the previous trading day). “All BDCs are allowed to sell to eligible end-users at a margin NOT MORE THAN one point five percent (1.5%) above the purchase rate from CBN.
“All eligible BDCs are directed to make the naira payment to the listed CBN naira Deposit Account Numbers and submit confirmation of payment with other necessary documentation for disbursement at the appropriate CBN Branches – (Abuja, Awka, Kano, and Lagos).”
New Telegraph reports that this is the fifth forex sale that the CBN is approving for BDCs after it resumed dollar sales to the money changers in February this year which it had discontinued on July 27, 2021, citing unethical practices by the BDCs. The resumption of the forex sales followed the apex bank’s revocation of licenses of over 4173 BDC operators in February.
A breakdown of the forex sales shows that at the first one in February, the CBN sold $20,000 to each BDC at the rate of N1,301/$. The second forex sale saw the regulator reducing the allocation by 50 per cent and selling at a rate.
