CBN Slashes BDC Exchange Rate to N1,036.3/$: Latest Round of Discounted Dollar Sales to BDCs

To stabilize the Nigerian economy and address the distortion in the retail segment of the foreign exchange (forex) market, the Central Bank of Nigeria (CBN) has taken significant steps in recent months.

These measures include slashing the exchange rate in the Bureaux De Change (BDC) segment by 7.2 percent to N1,036.3 per dollar and commencing another round of discounted dollar sales to 1,583 eligible BDCs.

This decision marks the third time the CBN has sold dollars to BDCs this year and the second time it has reduced the BDC exchange rate since the beginning of 2024.

The previous round of dollar sales to BDCs was in February, when the CBN sold $15.7 million to 785 BDCs at a rate of N1,301 per dollar.

In March, the apex bank sold $15.88 million to 1,588 BDCs at N1,101 per dollar.

In this latest round, the CBN will sell $10,000 to each BDC at N1,021 per dollar for eligible invisible transactions.

BDCs are required to sell to eligible end-users at a spread of not more than 1.5 percent, resulting in a maximum exchange rate of N1,036.3 per dollar.

The CBN’s decision to resume dollar sales to BDCs in February 2024 was aimed at addressing the exchange rate distortion in the retail segment of the forex market.

In 2021, the apex bank had suspended dollar sales to BDCs due to malpractices by operators.

However, the recent measures have been implemented to foster a more stable and transparent foreign exchange market in Nigeria.

Dr. Hassan Mahmud, the Director of the Trade and Exchange Department at the CBN, announced the new rate in a circular dated April 24, 2024.

The circular also directed eligible BDCs to commence payment of the Naira deposit to the CBN’s specified account numbers and submit the necessary documentations for disbursement of foreign exchange at the respective CBN branches.

The latest round of discounted dollar sales to BDCs is expected to inject $47 million into the retail segment of the forex market, significantly reducing the BDC exchange rate by 21 percent, from N1,313.01 to N1,036.3 per dollar.

As Nigeria’s economy continues to navigate the challenges of the global financial landscape, the CBN’s efforts to stabilize the foreign exchange market through strategic interventions and policy adjustments are vital for ensuring the country’s economic growth and resilience.