CBN sells Dollar to BDC operators at ‘cheap’ rate, fixes new resale exchange rate

The Central Bank of Nigeria has again made another bold move to achieve a stronger naira in the foreign exchange market.

In a circular released on March 25, 2024, the apex bank said a new round of $10,000 forex sales to licensed Bureau De Change (BDC) operators at N1,251/$1.

The Naira at N1,251/$1 is cheaper when compared with the official exchange rate at the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, which closed at N1408.04 on Monday, March 26.

CBN gives a resale rate

To achieve its objective and avoid round-tripping, the CBN has instructed the beneficiary BDCs to sell the allocated dollars to eligible customers at a rate not exceeding 1.5% above the purchase price.

This indicates that BDCs are expected to sell at a maximum of N1,269/$1.

The set exchange rate represents a reduction of 3.4% compared to the maximum of N1,314.01/$ set in the last round of sales to BDC operators.

CBN message to BDC operators

In a letter addressed to the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Hassan Mahmud, the director of the Trade and Exchange Department at the CBN, explained the rationale behind the adjustments is to stop the continued price distortions at the retail end of the market.

The circular reads:

“We refer to our letter to you referenced TED/DIR/CON/GOM/001/071 in respect of the above subject wherein the CBN approved a second tranche of sale of FX to eligible BDCs.

"We are writing to notify you about the sale of $10,000 to each BDC at the rate of N1,251/51. BDCs are required to sell to eligible end users with a margin not exceeding 1.5% above the purchase price.

"All eligible BDCs are instructed to make the Naira payment to the listed CBN Naira Deposit Account Numbers by the close of business on Thursday, March 28, 2024. Confirmation of payment, along with other necessary documentation, must be submitted for disbursement at the relevant CBN Branches."