CBN Sells $10,000 at N1,021/$1. to Each Licensed BDC Operator



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The Central Bank of Nigeria (CBN) has announced the sale of $10,000 to every licensed Bureau De Change (BDC) operator across the country, marking its second intervention in the month.

In a circular directed to the president of the Association of Bureau De Change Operators (ABCON), the CBN provided specifics of the intervention. BDCs are granted the opportunity to purchase dollars at the rate of N1,021 per dollar and are authorized to sell this forex to eligible end-users at a maximum spread of 1.5 percent above the purchase price, translating to a maximum selling price of N1,036.15 per dollar.

On April 8, 2024, the CBN sold $10,000 FX to each of the 1,588 participating BDCs at a fixed rate of N1101 per US dollar, with a spread capped at 1.5 percent above the purchase price from the CBN (approximately N1,116.15 per dollar). This move limited the potential profit BDCs could make on each transaction.

The latest circular mandates all eligible BDCs to initiate immediate payment of the Naira equivalent for their allocated $10,000 into designated CBN Naira Deposit Accounts, accompanied by the submission of necessary documentation to facilitate forex disbursement at respective CBN branches.

The CBN’s recent intervention is likely to be received with cautious optimism by market participants. The continuous injection of US dollars into the BDC segment aims to enhance forex access for legitimate transactions, potentially easing pressure on the parallel market.

However, the effectiveness of this strategy depends on various factors: the adequacy of the allocated amount to meet current forex demand remains uncertain; strict adherence to the stipulated maximum selling price by BDCs is crucial for ensuring transparency and averting market distortions; and while interim measures like these offer temporary relief, addressing the root causes of FX scarcity is imperative for long-term market stability.

The CBN’s recent actions since February 2024 underscore its ongoing commitment to manage forex liquidity and ensure the smooth operation of the foreign exchange market.

The success of this strategy hinges on continual monitoring, adjustments as necessary, and fostering a more market-driven approach to FX allocation in the long term.

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