The Central Bank of Nigeria on Tueaday announced its decision to sell foreign exchange worth $20,000 to each eligible Bureau De Change (BDC) operator across the country.
This follows the apex bank’s recent increase in capital requirements for BDCs tier 1 to N2 billion and N500 million for tier 2.
The CBN in a circular issued by the Director, Trade and Exchange Department, Hassan Mahmud, on Tuesday said the move was aimed at rectifying the persisting distortions in the retail segment of Nigeria’s foreign exchange market and bridging the widening gap in the exchange rate.
This development comes more than two years after the former CBN governor, Godwin Emefiele, stopped the sales of foreign exchange to BDC operators in that segment of the forex market.
In the circular titled, “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions,” the apex bank said the allocation would be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market as of the previous trading day.
“Following the ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the Naira, the Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium,” the circular stated.
It continued: “To this end, the CBN has approved the sale of foreign exchange to eligible Bureau De Change to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as of today, 27th February 2024).
“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one per cent (1 per cent) above the purchase rate from CBN.”
Central Bank of Nigeria on Friday announced that the minimum capital requirements for BDC operators in Nigeria would be N2 billion for Tier 1 license holders.
The bank added that the requirement for a Tier 2 licence would be N500 million, marking a departure from the previous threshold of N35 million for a general license.
