The Central Bank of Nigeria (CBN) has approved the sale of an additional $20,000 to each eligible Bureau de Change (BDC) operator across the country. This latest move aims to boost foreign exchange liquidity and stabilize the retail market.
Circular Announcement
The announcement was made in a circular dated September 25, 2024, signed by Dr. W.J. Kanya, Acting Director of the CBN’s Trade & Exchange Department. According to the circular, the CBN has set the sale price at N1,590 per US dollar, which is N10 higher than the previous rate used for the $20,000 sale to BDCs earlier this month.
Profit Margin Limit for BDCs
The CBN has implemented a strict margin limit for BDC operators, allowing them to sell foreign exchange to eligible end-users at no more than 1% above the CBN’s purchase rate. This measure is designed to maintain transparency in forex transactions and curb excessive profit-taking within the market.
The circular emphasized:
“All BDCs are allowed to sell to eligible end-users at a margin of NOT MORE THAN one percent (1%) above the purchase rate from CBN.”
Process for Participation
Eligible BDC operators interested in participating in this forex transaction are required to make necessary naira payments to their CBN deposit account numbers. Payment confirmation and all relevant documentation must be submitted to designated CBN branches for disbursement of the $20,000.
Designated CBN branches for this transaction include Abuja, Awka, Kano, and Lagos. BDCs can collect the approved foreign exchange after completing the required documentation.
Boost to Forex Liquidity
This move is expected to enhance foreign exchange liquidity, particularly for transactions classified as “invisible.” Invisible transactions include services such as education fees, medical expenses abroad, and personal travel allowances, which do not involve the physical movement of goods.
The circular noted:
“The CBN has approved the sale of US$20,000.00 to each eligible BDC at the rate of N1,590/$. This is to meet the demand for invisible transactions.”
Forex Sale Frequency
This is the second time this month that the CBN is selling foreign exchange to BDCs, bringing the total to seven sales this year. With 1,583 approved BDC operators, the CBN’s two forex sales in September could cost the apex bank up to $63.32 million.
By providing this additional liquidity, the CBN aims to ease pressure on the retail market and ensure forex availability for personal and business needs.