Market News

 by Nduka Chiejina, Abuja and Sarah Bolaji

In a bid to address the persistent distortions in the foreign exchange market, the Central Bank of Nigeria (CBN) has announced the resumption of dollar sales to Bureau de Change (BDC) operators.

The apex bank, in a circular issued on Thursday to all Bureau De Change operators and the general public, the CBN stated that the move is aimed at achieving a more stable exchange rate for the Naira.

The circular signed by A.A Mahdi For Ag. Director Trade and Exchange Department of the CBN said the bank has “observed the continued distortions in the retail end of the market, which is feeding into the Parallel market and further widening the exchange rate premium.”

According to Mahdi, under the new guidelines, eligible BDCs will be allowed to purchase a maximum of $20,000 at a fixed rate of N1,450 to the dollar. This rate is pegged to the lower band of the previous day’s trading rate on the Nigerian Autonomous Foreign Exchange (NAFEX) window.

BDCs are permitted to sell dollars to eligible end-users at a maximum margin of 1.5 percent above the purchase rate from the CBN.

To ensure compliance, BDCs are required to make Naira payments into designated CBN accounts and submit the necessary documentation for disbursement at specified branches in Abuja, Awka, Kano, and Lagos.

The CBN attributed the decision to the widening gap between the official and parallel market exchange rates, which it blamed on distortions in the retail end of the market.

The apex bank expressed hope that the move will help to stabilize the foreign exchange market and reduce pressure on the Naira.

“All BDCs are allowed to sell to eligible end-users at a margin NOT MORE THAN one point five percent (1.6 %) above the purchase rate from CBN,” acting director of trade & exchange department at the CBN, A. Mahdi, said in the circular. 

CBN said the move was part of its ongoing reforms in the foreign exchange market with the objective of achieving an appropriate market determined exchange rate for the Naira.

According to the circular, all eligible BDCs were 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.

“Please be guided accordingly,” Mahdi stated.