CBN sells forex to BDC to meet retail demand

Nigeria’s central bank on Thursday sold the dollar at 1,450 Naira to retail exchange bureaux to prop up the currency, saying that distortions in the retail market was feeding into parallel markets and widening the country’s exchange rate premium. The Naira hit a new low of N1,640 per dollar on Thursday, the same level it traded at on the parallel market. It touched a four-month low of 1,612.50  Naira on the official market on Wednesday, LSEG data showed.

The CBN said in a circular “Following the on-going reforms in the foreign exchange market, with the objective of achieving an appropriate market determined exchange rate for the Naira, the Central Bank of Nigeria (CBN) has observed the continued distortions in the retail end of the market, which is feeding into the Parallel market and further widen the exchange rate premium. To this end, the CBN has approved the sales of FX to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions. 

“The sum of $20,000 is to be sold to each BDC at the rate of N1,450/$ (representing the lower band of the trading rate at NAFEM in the previous trading day). All BDCs are allowed to sell to eligible end-users at a margin NOT MORE THAN one point five percent (1.5 %) above the purchase rate from CBN. All eligible BCs are directed to make the Naira payment to the listed CBN Naira Deposit Account Numbers and submit confirmation of payment with other necessary documentation for disbursement at the appropriate CBN Branches – Abuja, Awka, Kano and and Lagos