CBN Resumes Sales of Dollars to BDCs Amid Market Reforms

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

This move comes more than two years after the former CBN governor, Godwin Emefiele, halted the sales of foreign exchange to BDC operators in that segment of the forex market.

In a new circular issued and signed by the Director of Trade and Exchange Department, Hassan Mahmud, on Tuesday, February 27, 2024, the apex bank stated that the decision aims to rectify the persisting distortions in the retail segment of Nigeria’s foreign exchange market and bridge the widening gap in the exchange rate.

The allocation 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 as of the previous trading day, dated February 27, 2024.

The circular further emphasized that all BDCs are allowed to sell to end-users at a margin not more than one per cent above the purchase rate from the CBN.

This measure is expected to help stabilize the foreign exchange market and ensure that the retail end of the market is not feeding into the parallel market.

As the market continues to adapt to these reforms, it remains to be seen how the resumption of sales of foreign exchange to BDCs will impact the overall economy and the foreign exchange market.