For the second time in two months, the Central Bank of Nigeria, CBN, reduced the exchange rate in the Bureaux De Change, BDC, segment of the currency market by 7.2 percent, or N81.2 to N1,036.3 per dollar, as it began another round of dollar sales to 1,583 qualifying BDCs.
The CBN announced the new rate in a circular, stating that it will sell $10,000 to each BDC at N1,021 per dollar for qualified invisible transactions, with the BDCs instructed to sell to eligible end users at a spread of no more than 1.5 percent. This means that BDCs will sell to end consumers at a maximum exchange rate of N1,036.3 per USD.
Dr. Hassan Mahmud, Trade and Exchange Department, CBN, announced the new rate in a circular today, saying: “We write to advise you of the Central Bank of Nigeria’s (CBN) sale of $10,000 to BDCs at the rate of N1,021/$1. The BNCs, in turn, must sell to authorised end users at a spread of no more than 1.5 percent above the purchase price.
“All eligible BDCs are therefore directed to commence payment of the Naira deposit to the underlisted Naira Deposit Account Numbers from today, Monday, April 22, 2024, and submit confirmation of payment, along with other necessary documentation, for FX disbursement at the respective CBNBranches. “All BDCs are recommended to continue to follow the norms and conditions outlined in our previous letters/operational guidelines.
The aforesaid event marks the third sale of dollars to BDCs this year. This is also the second time the top bank has reduced the BDC exchange rate. In 2021, the central bank halted dollar sales to BDCs due to operator malpractices.
However, in order to address exchange rate distortion in the retail forex market, it announced on February 27th the resumption of dollar sales to BDCs to accommodate retail demand for qualified invisible transactions.
In the first round, the CBN sold $15.7 million 785 BDCs at $20,000 per BDC at a rate of N1,301/$, with the condition that the dollars be sold to end-users at a margin no more than one percent (1%) above the CBN’s purchase rate of N1,314.01 per dollar.
In the second phase, the CBN sold $15.88 million to 1,588 BDCs at $10,000 per BDC, or N1,101 per dollar, with the condition that the BDCs sell to approved end-users at a spread of no more than 1.5 percent. This means BDCs will sell to end consumers at a maximum exchange rate of N1,117.5 per dollar.
CBN
Combined with the $15.83 million to be sold to 1,583 BDCs in the third round, the bank has injected $47 million into the retail forex market in two months, while also lowering the BDC exchange rate by 21%, from N1, 313.01 to N1, 314 per dollar.
Source: Vanguardngr.com
