The Central Bank of Nigeria (CBN) yesterday resumed dollar sales to Bureaux De Change (BDC) operators with a planned disbursement of $20,000 to each licensee.
The forex injection, it said, is expected to curb forex distortions, boost liquidity in the market and stabilise the naira.
In a circular to all BDC operators and the public, the CBN said it “observed the continued distortions in the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.”
The circular was signed by Aliyu Mahdi for the bank’s Acting Director of Trade and Exchange Department.
The apex bank said that eligible BDCs would be allowed to purchase a maximum of $20,000 at a fixed rate of N1,450 to the dollar. The rate is pegged to the lower band of the previous day’s trading rate on the Nigerian Autonomous Foreign Exchange (NAFEX) window.
BDCs are permitted to sell dollars to eligible end-users at a maximum margin of 1.5 percent above the purchase rate from the CBN.
To ensure compliance, BDCs are required to make Naira payments into designated CBN accounts and submit necessary documentation for disbursement at specified branches in Abuja, Lagos, Kano, and Awka in Anambra State.
The CBN attributed the decision to the widening gap between the official and parallel market exchange rates, which it blamed on distortions in the retail end of the market. The bank expressed hope that the move would also help to reduce pressure on the naira.
Association of Bureaux De Change Operators of Nigeria (ABCON) President Aminu Gwadabe said the new dollar injections in the market will induce liquidity and stabilise the naira.
He added that the move has already impacted positively on the Naira, which appreciated from N1,640/$ to N1,570 /$ at the parallel market.
According to him, the review of the return of forex sales to BDCs is commendable and a good step in addressing the challenges confronting the retail end forex market.
The surge in demand pressure through the recent fiscal policies such as duty waiver, and removal of import duty on certain basic needs will surely be augmented by the resumption of forex sales 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 meeting the critical liquidity needs in the forex market,” Gwadabe said.
He called on ABCON members to reciprocate the opportunity and comply with regulations for the sustainability of the sub-sector.
The ABCON president also enjoined the government to continue to collaborate with stakeholders in the strategy and tactics to tackle the challenges facing the country.
