Exchange rate may crash soon as Nigeria’s apex bank gives new orders to BDCs

The dollar to naira exchange may crash soon as the Central Bank of Nigeria says it plans to sell forex to bureau de change operators at N1,301 per dollar.

This was contained in a statement signed by Hassan Mahmud, a director at the Trade and Exchange Department.

The apex bank announced that the move aimed at enabling the sale of foreign exchange to BDC operators to meet the retail demand for eligible invisible transactions.

“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 (CBN) 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.”

“To this end, the CB has approved the sale of foreign exchange to eligible bureau de change (BDCs) 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/$1 – (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as of today, 27th February 2024),” said the CBN statement.

The Central Bank then directed all BDCs to sell to end-users at a margin not more than one per cent above the purchase rate from CBN.

“All eligible BDCs are directed to make the naira payment to the designated CBN foreign currency deposit naira accounts and submit confirmation of payment, with other necessary documentations, for disbursement at the appropriate CBN branches – Abuja, Awka, Lagos and Kano,” the apex bank stated.