The Central Bank of Nigeria (CBN) has adopted a new monetary measures aimed at bridging the Naira’s widening foreign exchange (FX) rate gap in the foreign exchange markets by supplying FX to licensed Bureau De Change operators in the retail market.
The apex bank, in a new circular signed by its Director of Trade & Exchange Department, Dr. Hassan Mahmud, hinted of its plan to supply $20,000 to each eligible Bureau De Change (BDC) operator as part of the broader efforts to achieve a market-driven exchange rate for the Naira and alleviate the current pressures in the parallel market.
According to the circular, the FX allocation will be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as of the previous trading day, dated February 27, 2024.
The CBN believes that the strategy will inject the much-needed liquidity into the market and stabilise the Naira’s exchange rate.
To benefit from the FX allocation the circular outlines specific guidelines for the BDC operators, stipulating that all BDCs are permitted to sell FX to end-users at a margin not exceeding one percent (1%) above their purchase rate from the CBN as a means of preventing excessive mark-ups and protect consumers from price exploitation.
The circular reads: “The CBN has approved the sale of foreign exchange to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as at today, 27th February 2024).
“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one percent (1%) above the purchase rate from CBN”, it added.
Other requirements contained in the circular are that eligible BDCs are mandated to deposit their Naira payments into designated CBN Foreign Currency Deposit Naira Accounts as well as provide confirmation of payment along with other necessary documentation to facilitate disbursement at the appropriate CBN branches located in Abuja, Awka, Lagos, and Kano.
