The Central Bank of Nigeria (CBN) has announced the approval of an additional sale of $20,000 to each eligible Bureau de Change (BDC) operator, aiming to boost liquidity in the foreign exchange market. This comes as part of efforts to meet demand for invisible transactions such as payments for education, medical expenses abroad, and personal travel allowances.
In a circular issued on September 25, 2024, and signed by Dr. W.J. Kanya, Acting Director of the CBN’s Trade & Exchange Department, the apex bank confirmed that the $20,000 will be sold to BDCs at a rate of N1,590 per US dollar. The new rate is N10 higher than the rate used earlier in the month for similar transactions.
The circular emphasized that BDC operators are allowed to sell foreign exchange to eligible end-users with a margin not exceeding 1% above the CBN purchase rate. This measure is designed to promote transparency and prevent excessive profit-taking in the retail foreign exchange market.
“Eligible BDCs interested in participating in this transaction are directed to make the necessary naira payment to their respective CBN deposit accounts and submit payment confirmation and all required documentation at designated CBN branches,” the circular stated.
The approved branches for collection are located in Abuja, Awka, Kano, and Lagos.
Key Details:
Transaction Limit: BDCs will sell the $20,000 to end-users at a margin of no more than 1% above the CBN’s rate of N1,590/$.
Eligibility: BDC operators must make naira payments into their CBN deposit accounts before receiving disbursements.
Branches for Disbursement: CBN branches in Abuja, Awka, Kano, and Lagos have been designated for disbursement.
The CBN’s decision to provide this additional liquidity is aimed at addressing the increased demand for foreign exchange related to invisible transactions, which do not involve the physical movement of goods across borders.
Increased Forex Sales to BDCs
This is the second sale of foreign exchange to BDCs this month, bringing the total to seven sales this year. With 1,583 approved BDC operators participating in the current transaction, the CBN is expected to disburse up to $63.32 million for the two sales in September alone.
Impact on Forex Market
The CBN’s move is seen as part of its broader strategy to ensure stability in Nigeria’s foreign exchange market, particularly during a period of heightened demand. By selling directly to BDCs, the CBN hopes to ease pressure on the naira and reduce the cost of foreign exchange for end-users in need of dollars for personal and business-related invisible transactions.
While this measure provides a short-term boost to liquidity, market watchers will be closely observing its impact on the broader forex market and whether it can effectively curb rising exchange rates and stabilize the naira.
