The Central Bank of Nigeria (CBN) has taken a decisive step to bridge the gap between the official and unofficial exchange rates by allowing all Bureau De Changes (BDCs) to sell foreign exchange to end-users at a margin of no more than one percent (1%) above their CBN purchase rate.
This comes more than two years after suspended former CBN governor Godwin Emefiele prohibited the sale of foreign exchange to BDC operators in that area of the FX market.
To that end, the CBN, in a fresh circular issued by Dr Hassan Mahmud, Director of Trade & Exchange Department, announced the decision to give $20,000 to each eligible Bureau De Change (BDC) operator across the country at a rate of N1,301/$.
Furthermore, the circular specifies particular criteria for BDC operators as part of the larger attempts to develop a market-driven exchange rate for the Naira and lessen the pressures that feed into the parallel market.
This allotment would be sold at N1,301 per dollar, representing the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on the preceding trading day, February 27, 2024.
According to the bank, this policy is expected to infuse much-needed liquidity into the market while also stabilising the Naira’s value.
The law also aims to discourage excessive markups and safeguard customers 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.