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Tuesday, April 23, 2024

CBN sets exchange rate for Bureau De Change dollar Sales at N1,261

CBN Allocates $10,000 per Operator at N1,251/$, Imposes Selling Limit

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The Central Bank of Nigeria (CBN) has revealed plans to allocate $10,000 to each Bureau de Change (BDC) operator at an exchange rate of N1,251 per dollar, according to a circular issued by the bank’s Director of Trade and Exchange Department, Dr. Hassan Mahmud.

In the circular on Monday, the apex bank instructed BDCs to sell the allocated dollars to eligible customers with a cap not exceeding 1.5 percent above the purchase price, effectively setting the maximum selling rate at N1,269 per dollar.

This decision follows the CBN’s move to discontinue foreign exchange sales to BDCs in July 2021, citing violations of FX regulations and trading practices, only to reverse course in February by announcing plans to sell $20,000 to each eligible BDC operator across the nation.

The initiative marks a notable shift since the suspension of former CBN Governor Godwin Emefiele, who halted foreign exchange sales to BDC operators more than two years ago.

Despite this development, the Nigerian naira demonstrated resilience against the United States dollar on Monday, appreciating by N14 to close at 1,408 per dollar at the official market.

The circular stated, “We refer to our letter to you referenced TED/DIR/CON/GOM/001/071 in respect of the above subject, wherein the CB approved a second tranche of the sale of FX to eligible BDCs. We write to inform you of the sale of $10,000 to each BDC at the rate of N1,251/$1. The BDCs are to sell to eligible end users at a spread of not more than 1.5 percent above the purchase price.”

Last month, CBN Governor Olayemi Cardoso outlined a comprehensive strategy aimed at addressing inflation, stabilizing the exchange rate, and restoring confidence in Nigeria’s banking system and economy.

Through measures implemented during the Monetary Policy Committee meeting and engagements with foreign portfolio investors, the central bank seeks to bolster foreign currency reserves and enhance liquidity in the FX market.

Cardoso remarked, “All the different measures we have taken to boost reserves and create more liquidity in the markets have started to pay off.”

Experts assert that enhancing liquidity by central banks injects more money into the financial system, aiding in stabilizing the foreign exchange market by providing additional funds for currency transactions.

Marcel Okeke, former Chief Economist of Zenith Bank, emphasized the necessity for increased dollar supply to stimulate Nigeria’s economy, underscoring the significance of the CBN’s recent initiatives.

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