The Central Bank of Nigeria (CBN) has rolled out a discounted dollar sales program for Bureau De Change (BDC) operators. This move, the second of its kind this month and the fourth for the year, underscores the CBN’s proactive approach to managing currency dynamics in Nigeria.
The latest directive from the CBN stipulates the sale of US dollars at a discounted rate of N1,021 per dollar to BDC operators. This initiative aims to bolster the retail-end market, specifically targeting invisible transactions such as travel allowances, tuition fees, and medical payments.
This discounted sales program follows earlier initiatives by the CBN in February 2024, where $20,000 was allocated to each BDC at a rate of N1,301 per dollar. Subsequent allocations were halved, with FX sold at N1,251 per dollar. Notably, earlier this month, the CBN sold $10,000 to each BDC at a rate of N1,101 per dollar.
Under the current directive, eligible BDCs are mandated to sell the allocated $10,000 to end-users with a maximum markup of 1.5% over the buying price. This measure aims to curb price gouging and ensure that consumers benefit from the discounted rate for personal transactions.
The circular issued by the CBN instructs eligible BDCs to initiate Naira deposits to specified CBN accounts from April 22, 2024, onwards. Upon payment confirmation and submission of required documentation, FX disbursement will be facilitated at respective CBN branches.
However, despite these interventions, the Nigerian Naira is experiencing weakening against the US dollar in both official and black markets. On April 22, 2024, the official exchange rate fell to N1,234.49 per dollar from N1,169.99 per dollar recorded just days earlier. Additionally, the Naira remains above the N1200 per dollar mark in the unofficial market, signaling a pause in its recent winning streak against the greenback.
The CBN had earlier listed 1588 eligible BDCs, suggesting that if all fulfill their dollar allocations, it could cost the apex bank approximately $15.88 million. CBN Governor Yemi Cardoso emphasized that interventions in the BDC segment are minimal and targeted, aiming to ensure effective integration into the broader market. He clarified that while kickstarting this segment was the initial focus, ongoing interventions are not the bank’s primary objective.
The CBN’s discounted dollar sales program to BDC operators reflects a concerted effort to manage currency fluctuations and meet essential foreign exchange demands in Nigeria. While these interventions aim to stabilize the market, challenges persist as the Naira experiences weakening against the US dollar. With ongoing scrutiny over foreign exchange reserves, the effectiveness of these measures will remain under close observation.
Credit: Nairametrics (Text Excluding Headlines)
