CBN Resumes FX Sales to BDCs, Pegs Rate at N1,301/$1

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) will begin selling Dollars to eligible Bureau De Change operators (BDCs) at a pegged rate of N1,301/$1 in its latest effort to improve liquidity in the Nigerian foreign exchange market.

The apex bank will begin those sales after proposing more stringent rules for BDC operators last week, according to a circular published on Tuesday.

According to the notice signed by Mr Hassan Mahmud, the CBN Director of Trade and Exchange Department and seen by Business Post, the CBN said it carrying out the move due to “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.”

It is coming three years after the former governor of the bank, Mr Godwin Emefiele banned the sale of the greenback to those operators.

BDCs will only be permitted to sell to end-users at a margin not exceeding 1 per cent above the purchase rate from CBN, according to the new directive.

“To this end, 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),” the statement added.

All BDCs are allowed to sell to end-users at a margin not more than one per cent (16) above the purchase rate from CBN.

The statement added that all eligible BOCs 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 in Abuja, Awka, Lagos and Kano.

Business Post earlier reported that CBN announced a 400 basis points or 4.00 per cent hike in the Monetary Policy Rate (MPR) to 22.75 per cent from the 18.75 per cent it was increased to in July 2023, when the MPC was last held.

The Governor of the CBN, Mr Yemi Cardoso, while addressing journalists at the end of the two-day Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, said the Cash Reserve Ratio (CRR) was raised by 12.5 per cent to 45.0 per cent from 32.5 per cent, with the liquidity ratio at 30.0 per cent and the Asymmetric Corridor at +100 basis points and -700 basis points around the MPR.