CBN Approves Fresh FX Allocation to Bureau De Change Operators at Lower Rate
- Slashes volume to $10,000 at N1,251/$
- Pegs sale to end-users at not more than 1.5% above purchase price
The Central Bank of Nigeria (CBN), yesterday, approved a second tranche of sale of foreign exchange (FX) to eligible Bureau De Change (BDC) operators to meet their demand for invisible transactions.
The central bank disclosed that the sum of $10,000 would be sold to each BDC at the rate of N1, 251/S, which was a N50 reduction compared to N1, 301/S allocation in the initial tranche.
The latest intervention also showed that the apex bank halved the $20,000 it allocated to each BDC in February.
CBN conveyed the latest allocation in a letter addressed to President, Association of Bureau De Change Operators of Nigeria (ABCON), dated March 25, 2024, and signed by CBN Director, Trade and Exchange Department, Dr. Hassan Mahmud.
The bank further instructed the BDC operators to sell FX to eligible end-users at a spread of not more than 1.5 per cent above the purchase price, compared to one per cent previously.
The central bank also warned that any BDC that breached the terms of sale to end-users would be sanctioned appropriately, including outright suspension from further participation in the sale.
Only last month, the CBN announced that it had approved the sale of FX to eligible BDC operators to meet their demand for invisible transactions. The bank sold $20,000 to each BDC at the rate of N1, 301/S, which represented the lower band rate of executed spot transactions at the Nigeria Autonomous Foreign Market (NAFEM) for the previous trading day, as of February 27, 2024.
The apex bank explained that the intervention became necessary following the continued price distortions at the retail end of the market, which was feeding into the parallel market and further widening the exchange rate premium.
The move also complemented ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the naira.
CBN highlighted that the BDCs were allowed to sell to end-users at a margin not more than one per cent above the purchase rate from the central bank.
The naira extended its gains, yesterday, on the official NAFEM window, it appreciated by N23.45 to close at N1, 408.04/$1, compared to N1, 431.49 on Friday.
On the other hand, on the parallel market, the naira closed at N1, 400/$1, from N1, 440/$1 it exchanged over the weekend.
Daily foreign exchange turnover on the official window also increased by 11.06 per cent to $221.80 million, from $199.7 million on Friday.
The highest spot rate yesterday was pegged at N1, 422 while the lowest spot rate recorded was N1, 300.
