Naira gains across markets as CBN sells dollar to BDCs

The Nigerian currency, Naira, has continued to appreciate in the foreign exchange market as a result, as the Central Bank of Nigeria (CBN) was recorded to have sold dollars at N1,251 to the Bureau De Change (BDC) Operators.

In the month of  February 2024, the CBN bank promised to sell BDCs $20,000 weekly at the rate of N1,301.

It’s been announced that a circular from the CBN shows that the apex bank instructed the BDCs to sell dollars to eligible customers at a rate exceeding 1.5 percent over the purchase price.

The forex counsel’s conclusion proved that the naira appreciated by 1.64 percent, as the dollar was at N1,408.04 on Monday, March 25th, 2024, yet stronger than N1,431.49 claims on Friday, March 22nd, 2024, at the Nigerian Autonomous Foreign Exchange Market (NFEM).

Daily FX market turnovers have  increased by 11.06 percent to $221.80 million as of Monday from $199.71 million which was  recorded on Friday.

The CBN has released a circular which reads, “We refer to our letter to you referenced TED/DIR/CON/GOM/001/071 in respect of the above subject. 

“We write to inform you of the sale of $10,000 to each BDC at the rate of N1,251/$1. The BDCs are to sell to eligible end users at a spread of not more than 1.5 per cent above the purchase price.”

The dollar rate as of Monday crashed to N1,450, elevating the value of the naira by 2.07 percent as different people offload foreign currency at the foreign exchange market, popularly known as the black market.

The naira value, which was close to N1,480 as of Friday, appreciated to N1,450 on Monday, causing loss of money for many speculators who bought dollars at a very higher rate.

In February, the CBN officialized dollar sales of $20,000 per BDC.

This accompanied continuous reforms in the foreign exchange market, which were geared towards receiving a reasonable market-specified exchange rate for the Naira.

In another circular distributed by the CBN on February 27, 2024, endorsed by Hassan Mahmud, Director of the Trade and Exchange Department, the Central Bank showed great concern over current price distortion in the local market, contributing to boarding exchange rate differences in the entire market.

In response, the CBN has officially announced the foreign exchange sales to eligible Bureau De Change to handle the need for invisible transactions. Each BDC is authorised to purchase $20,000 at a rate of N1,301/$. 

All eligible BDCs were required to make Naira payments to specified CBN foreign currency deposit Naira accounts and deliver payment confirmations with all the necessary documentation for disbursement at any CBN branch in Abuja, Awka, Lagos, or Anorano.

This contrasts with the decision of the CBN on July 27, 2021, under the governor, Godwin Emefiele, the former governor of the Central Bank of Nigeria, to halt foreign exchange sales to BDCs.