The Central Bank of Nigeria resumed the sale of foreign exchange to eligible Bureau De Change operators on Thursday, as the naira fell to 1,570/$ at the parallel market
The CBN sold the dollar to BDCs at a rate of 1,450/$.
This was disclosed in a statement signed by AA Mahdi for the acting director of the Trade and Exchange Department at the CBN.
The apex bank said, “Following the ongoing reforms in the foreign exchange market, with the objective of achieving an appropriate market-determined exchange rate for the naira, the Central Bank of Nigeria” has observed the continued distortions in the retail end of the market.
“To this end, the CBN has approved the sale of FX to eligible Bureau de Change to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,450 (representing the lower band of the trading rate at NAFEM in the previous trading day).”
It warned the BDCs to sell to eligible end-users at a margin not more than 1.5 per cent above the purchase rate from CBN.
The dollar, which traded as low as 1,640/$, settled at 1,570/$ at the parallel market, having closed Wednesday’s trading at 1,565/$.
Findings from BDC operators by The PUNCH showed that the naira was trading between 1,620/$ and 1,630/$ on the black market.
According to London Stock Exchange Group data, the naira fell to a four-month low of 1,612.50/$ on the official market on Wednesday.
A BDC operator in Abuja, Mohammed Magaji, stated that a dollar was sold at 1,630/$ and he was willing to buy at 1,620/$.
Asked about the reason for the change in the exchange rate, Magaji simply said, “That is the way the market is today.”
Another operator, Taura Abdusalam, declared, “I sell dollars at 1,620/$ and I can buy at 1,620/$.”
The President of the Association of Bureau de Change of Nigeria, Aminu Gwadebe, who spoke with The PUNCH, blamed the decline on “acute shortages, speculative activity, public hedging to guide inflation, and the surge in demand from recent duty waivers on certain critical food imports”.
He added that the rate had since started to retreat, adding, “The rates came down from N1640/$ to N1570/$ and the trajectory remained positive.”
At the close of trading on Thursday, the naira closed on the official National Autonomous Foreign Exchange Market at 1,566.82/$ with a turnover of $273.14m; an improvement from Wednesday’s 1,581.65/$ with a daily turnover of $108.16m.
On the resumption of the sale of forex to BDCs, Gwadebe said that the sale of $20,000 to BDCs would ease liquidity in the market.
Gwadebe noted, “The review of the return of sales of FX to BDCs is commendable and a manifestation of the policy stress test in addressing the myriad challenges confronting the retail end FX market. It will help to induce liquidity and enhance confidence in the market.
The surge in demand pressure through the recent fiscal policies of duty waiver and removal of import duty on certain basic needs will surely be augmented by this review of the sales of FX back to the BDCs.
“The BDCs will continue to play their third-level roles in the retail end of the market and will remain the potent and most effective tool of the CBN’s demand monitoring mechanism and meet the critical liquidity needs in the Fx market.”
The ABCON chairman urged members of the association to comply with regulations for the survival and continuing sub-sector.
“I also called on the Government to continue to collaborate with stakeholders in their strategy and tactics to tackle the challenges facing the country. I also appeal to the CBN to continue to look into our appeals in allowing all our members illegible and Eligible to come together and form new partnerships in line with their new regulations 2024 on BDCs. We believe that will make the market liquid and stable,” he added.
