CBN to resume forex sales to BDCs

Central Bank of Nigeria CBN is to resume foreign exchange sales to Bureau De Change operators by the end of the month, just as plans are on to reopen international flights and travels. The central bank suspended forex sales to bureaux de change (BDC) operators in March as a coronavirus-induced lockdown cut demand for individuals with dollar expenses, to help protect the Naira after a 15% devaluation prompted as an oil price crash. It later weakened the Naira in a move to unify its multiple exchange rates.

The bank said it will sell $10,000 to each of the country’s 5,000 retail currency operators on Aug. 31, according to a bank circular, down from the $20,000 each it sold to the traders. A BDC official said it planned to sell dollars to them twice in a week, compared to four times in the past. Traders cannot resell dollars bought from the central bank at more than 386 Naira, the circular said. The Naira traded at 477 to the dollar on the black market on Thursday, patronised by individuals with dollar expenses abroad, which is 20% weaker than where the official market quotes the currency at 386.15 Naira. The central bank resumed dollar sales to commercial banks in April in view of the gradual easing of the lockdown.

However, demand has been swelling and piling up pressure on the Naira, particularly from individuals and from foreign investors that need to repatriate funds abroad. The central bank is resuming dollar sales to individuals just as airports, which have been closed for five months, reopen for international flights. It did not provide details on when sales to foreign investors will resume. The bank this week rolled out new measures targeted at non-oil exporters to try to force them to process dollar proceeds through domestic lenders to increase hard currency liquidity and support the Naira.