The Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.”
By Deborah Hassan
365Daily – In a bid to address distortions in the retail segment of Nigeria’s foreign exchange market, the Central Bank of Nigeria (CBN) has announced its decision to begin sale of foreign exchange worth $20,000 to eligible Bureau De Change (BDC) operators across the country.
Embattled former CBN governor, Godwin Emefiele, had stopped the sales of foreign exchange to BDC operators about 2 years ago.
The Director of Trade and Exchange Department at the Apex bank, Hassan Mahmud, made this known in a circular on Tuesday.
The circular titled, “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions,” explained that the allocation will be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market as of the previous trading day, dated February 27, 2024.
It stated, “Following the ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the Naira, the Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.
“To this end, the CBN has approved the sale of foreign exchange to eligible Bureau De Change 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 of today, 27th February 2024).
“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one per cent (1 per cent) above the purchase rate from CBN.
“All eligible BDCs are directed to make the Naira payment to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentation, for disbursement at the appropriate CBN Branches ABUJA, AWKA, LAGOS and KANO,” it added.