The Central Bank of Nigeria (CBN) has taken a decisive step to bridge the gap in the official and unofficial exchange rate by stipulating that all Bureau De Changes (BDCs) are permitted to sell foreign exchange to end-users at a margin not exceeding one percent (1%) above their purchase rate from the CBN.
This is coming more than two years after the suspended former CBN governor, Godwin Emefiele, stopped the sales of foreign exchange to BDC operators in that segment of the forex market.
To this end, the CBN has through a new circular by Dr Hassan Mahmud, the Director of Trade & Exchange Department, announced decision to distribute $20,000 to each eligible Bureau De Change (BDC) operator across the country at a rate of N1,301/$.
Also, the circular outlines specific guidelines for the BDC operators as part of the broader efforts to achieve a market-driven exchange rate for the Naira and alleviate the pressures feeding into the parallel market.
This 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 (NAFEM) as of the previous trading day, dated February 27, 2024.
According to the bank, this strategy is anticipated to inject much-needed liquidity into the market and stabilise the Naira’s value. The measure is also intended to prevent excessive mark-ups and protect consumers from price exploitation.
The circular reads:“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).
“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one percent (1%) above the purchase rate from CBN.
It further stated that Eligible BDCs are mandated to deposit their Naira payments into designated CBN Foreign Currency Deposit Naira Accounts. They must also provide confirmation of payment along with other necessary documentation to facilitate disbursement at the appropriate CBN branches located in Abuja, Awka, Lagos, and Kano.
This strategic intervention by the CBN is expected to enhance the efficiency of the foreign exchange market, providing a more transparent and equitable platform for the trading of the Naira.
Meanwhile, in an effort to curb naira depreciation against the dollar, the federal government last week, among several other measures, blocked the online platforms of Binance and other crypto firms to avert continuous manipulation of the forex market and halt illicit movement of funds.
Apart from Binance, other platforms such as Forextime, OctaFX, Crypto, FXTM, Coinbase, Kraken, among others, were equally blocked.
Earlier on Tuesday, the office of the National Security Adviser directed law enforcement agencies to take firm measures against anyone engaged in foreign exchange market speculation.
The government also announced that it was planning to raise $10 billion to improve liquidity in the foreign exchange market. In an aggressive push to tackle currency racketeering, the Economic and Financial Crimes Commission (EFCC) last Monday raided and arrested some Bureau de Change (BDCs) operators across different regions in the country.
Within the past week, the CBN has also introduced several directives targeted at addressing the naira depreciation crisis in the country.
Last Wednesday, the CBN in a circular addressed to all banks, announced that cash payment for Personal and Business Travel allowances (PTA/BTA) would no longer be allowed.
By Chima Nwokoji-Tribune
