CBN Sells Dollar to BDCs at N1,101/$1 to Cheapen Exchange Rate

By Adedapo Adesanya

As part of its efforts to continue to ease the exchange rate in the country and strengthen the Naira, the Central Bank of Nigeria (CBN) has offered to sell Dollars to Bureau De Change (BDC) operators at N1,101/$1.

In a circular issued on Monday, the CBN announced the sale of $10,000 to each of the approved 1,588 BDCs in the country, directing them to sell to their eligible customers at a rate not exceeding 1.5 per cent above the purchase price.

According to the notice seen by Business Post, these forex traders are not allowed to exchange the local currency with the American currency higher than N1,117/$1, as failure to adhere to this could attract sanctions.

The selling rate is below the N1,251.05/$1 recorded at the end of last week, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM).

At the cost of N1,101/$1, the auction of the $10,000 means the CBN made over N15.89 billion from the 1,588 eligible BDCs highlighted in the circular.

Last week, the Naira posted further appreciation for the entire four days of trading at the official market, as it moved to post-devaluation levels. It is now cheaper to get FX on the streets than at official, regulated channels following recent policies by the CBN under Governor Yemi Cardoso.

The CBN this year alone has raised the benchmark interest rate by 600 basis points to 24.75 per cent in response to the country’s rapidly rising inflation. However, the CBN’s overall aggressive strategy has brought about some stability.

The use of unorthodox strategy, including cracking down on unofficial market operators and virtual service providers who it believes are exploiting the Naira’s weakness by driving demand for the US Dollar pegged USDT, has also provided support for the local currency.

Despite the return of the BDC players, the Association of Bureau de Change Operators of Nigeria (ABCON) in a letter signed by its President, Mr Aminu Gwadabe, to the Director, Trade and Exchange Department, said CBN’s selling rate to BDCs is very expensive.

The association, which is an umbrella body for CBN-licensed BDC operators, insisted that the Naira’s speedy recovery, which was faster than expected, had made it difficult to offload to retail end buyers that are trooping to the undocumented forex operators for cheaper rates and avoiding its services.