Nigeria’s Central Bank Revives Forex Sales to Bridge Exchange Rate Gap”

The Central Bank of Nigeria has announced its decision to resume the sale of foreign exchange to Bureau De Change (BDC) operators, providing each eligible operator across the country with $20,000.

This decision, more than two years after the suspension initiated by the former CBN governor, Godwin Emefiele, is outlined in a circular issued and signed by Hassan Mahmud, the Director of the Trade and Exchange Department, on Tuesday, February 27, 2024.

Titled “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions,” the circular aims to address the ongoing distortions in Nigeria’s foreign exchange market and narrow the gap in exchange rates.

The allocated foreign exchange 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 from the previous trading day.

Related News: CBN Mandates FX Sellers Of $10,000 And Above To Declare Sources

The circular states, “Following the ongoing reforms in the foreign exchange market… the Central Bank of Nigeria has observed the continued price distortions at the retail end of the market.”

It emphasizes the need to rectify these distortions to prevent further widening of the exchange rate premium.

Eligible BDCs are permitted to sell to end-users at a margin not exceeding one per cent above the purchase rate from the CBN.

The directive requires BDCs to make Naira payments to designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment along with other necessary documentation.

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The CBN’s recent efforts to stabilize the Naira include clearing FX backlog, restricting forex for foreign education and medical tourism, increasing BDCs’ minimum share capital, and combating FX speculation.

Further details are expected to follow.