CBN Resumes Dollar Sales to BDCs to Combat Naira Depreciation
The Central Bank of Nigeria (CBN) announced yesterday that it would resume selling dollars to Bureau De Change (BDCs), which helped the Naira strengthen from N1,640 per dollar to N1,572 per dollar in the parallel market.
This is the first time in two months, since April, that the CBN is selling dollars to BDCs.
A circular signed by A. A Mahdi, the Acting Director of the Trade and Exchange Department at CBN, stated that each BDC would receive $20,000. The BDCs are to sell to end-users at no more than N1,450 per dollar, which means the selling price will be N1,475.75 per dollar.
The CBN explained that this move is part of ongoing reforms to stabilize the Naira’s exchange rate. They noted that distortions in the retail market are affecting the parallel market, widening the gap between official and parallel rates.
To address this, the CBN approved the sale of foreign exchange to eligible BDCs for certain transactions. Each BDC will get $20,000 at a rate of N1,450 per dollar, reflecting the lower end of the previous day’s trading rate at the Nigeria Foreign Exchange Market (NAFEM). BDCs are allowed to sell to end-users at no more than 1.5% above the purchase rate from CBN.
BDCs must make the Naira payment to specific CBN accounts and submit payment confirmation and other required documents at the CBN branches in Abuja, Awka, Kano, and Lagos.
After this announcement, the Naira, which had fallen to N1,640 per dollar in the morning, appreciated to N1,572 per dollar by the end of the day. However, this still represents a N2 depreciation compared to the N1,570 per dollar rate in the parallel market on Wednesday.
