The Central Bank of Nigeria (CBN) has resumed selling U.S. dollars to Bureau de Change (BDC) operators in a bid to address the naira’s rapid depreciation. This decision follows the naira’s exchange rate falling to a record low of NGN1,639 per dollar, driven by heightened demand for U.S. dollars, especially for travel and business purposes.
To regulate the program, the CBN has outlined strict guidelines for participating currency traders, including a one percent margin on the purchase price and designated locations for submitting requests.
Addressing Nigeria’s Foreign Exchange Shortage
On September 6, the CBN began selling dollars to BDC operators once again to help meet the retail demand for invisible transactions. Qualified BDCs were offered $20,000 each at a rate of NGN1,580 per dollar, which is expected to help stabilize the naira amidst the ongoing currency crisis.
This latest intervention comes after the naira’s exchange rate against the dollar plummeted to NGN1,639, a significant drop that has been largely attributed to increased demand from wealthy Nigerians traveling abroad and conducting international business.
Earlier in July, the CBN took similar action when the naira hit what was then a historic low.
At the time, the central bank sold U.S. dollars to BDCs at a rate of NGN1,450, while authorized banks were provided over $100 million at exchange rates ranging between NGN1,498 and NGN1,530. This was preceded by an $80 million injection into the market in May.
Regulations for Participating Currency Traders
In its latest announcement, the CBN provided clear guidelines for BDC operators participating in the program. All BDCs are allowed to sell to eligible end-users with a margin not exceeding one percent above the CBN’s purchase rate.
Payments for these transactions must be made in naira to the CBN’s Deposit Account Numbers.
Interested BDCs are required to submit their documentation to designated CBN branches located in Abuja, Aba, Kano, and Lagos. This move is aimed at providing some relief to the ongoing foreign exchange shortage while maintaining regulatory oversight on the currency market.
As the CBN continues to intervene in the forex market, the focus remains on stabilizing the naira and addressing the broader economic challenges facing Nigeria.