The Central Bank of Nigeria (CBN) has issued another circular to Bureau De Change (BDC) operators, informing them of direct sales of US dollars at a discounted rate of N1,021 per dollar.
This move marks the second of such sale this month and the fourth in the current year, reflecting a proactive approach to managing currency fluctuation and meeting essential foreign exchange needs.
The CBN, in February 2024, announced the selling of $20,000 to each BDCS at the rate of N1,301/$. By the second attempt, the bank reduced the allocation by 50% and sold FX at a rate of N1,251/$1. Earlier this month, the apex bank had a sale of $10,000 to each BDC at a rate of N1,101/$1.
Aimed at addressing the retail-end market, particularly for invisible transactions such as travel allowances, tuition fees, and medical payments, this policy involves selling a total of $10,000 to each eligible BDC.
These BDCs are then required to sell to end users with a maximum markup of 1.5% over the buying price.
This stipulation is intended to prevent price gouging and ensure that the benefits of the discounted rate are transferred to consumers needing foreign exchange for various personal transactions.
The circular read:
Naira, which has been described as a best performing currency, is losing its steam in the official and black markets.
The exchange rate between the Naira and Dollar on the official NAFEM window fell to a week-to-date low of N1,234.49/$1 on Monday, 22nd of April 2024. This is a sharp depreciation from the official exchange rate N1,169.99/$1 recorded on Friday 19th of April 2024, which was also a 6-day low.
Also, the naira remained above the N1200/$ band in the unofficial market, causing the Nigerian currency to pause its winning streak against the American dollar on a weekly spectrum. The naira’s surge since late March, which had made it the best-performing currency in the world, came to a stop on Sunday when it had its first weekly decline in several weeks on the parallel market.
The break in the naira’s rapid rally coincided with a strengthening of the US dollar.
In an earlier circular, CBN had provided a list of 1588 eligible BDCs. If all the eligible BDCs paid for the dollar allocation from the CBN, it would likely cost the apex bank about $15.88 million.
Yemi Cardoso, CBN governor, recently stated that interventions in the BDC segment are minimal and targeted to ensure its effective integration into the broader market.
This comment came amid concerns around the depleting foreign exchange reserves, which dipped by $2.33 billion in 31 days.