The Central Bank of Nigeria (CBN) has initiated the sale of $10,000 each to Bureau De Change (BDC) operators, offering them direct access to US dollars at a discounted rate of N1,021 per dollar.
The move, aimed at bolstering the foreign exchange market and stabilising the naira against the dollar, signifies the second such sale this month and the fourth in the current year, demonstrating a proactive stance in managing currency fluctuations and meeting essential foreign exchange demands.
With the fresh intervention, the naira gained to N1,250/$ on the streets on Tuesday morning up from N1,300/$1 on Monday.
The CBN sold $10,000 to the BDCs at a rate of N1,021/$ on Monday.
The apex bank last sold dollars to the BDCs at a rate of N1,101 per US dollar and has now intervened in the market four times this year, selling a combined $63 million since lifting a ban on the sale of the greenback to the informal market.
The latest sale is expected to relieve the renewed pressure on the naira which snapped a one-month rally last Friday and fell for the second straight day on Monday.
Traders say they expect the naira to appreciate by close of trading today and in the coming days following the CBN’s dollar sale.
Designed to address retail-end market needs, particularly for invisible transactions like travel allowances, tuition fees, and medical expenses, the policy involves the sale of $10,000 to eligible BDCs.
The BDCs are then mandated to sell to end users with a maximum mark-up of 1.5 per cent over the buying price.
“We write to inform you of the sale of $10,000 by the Central Bank of Nigeria (CBN) to BDCs at the rate of N1,021/$1,” stated the circular issued on Monday by the bank’s director, trade & exchange department, Hassan Mahmud. BDC operators are directed to sell the greenback exclusively to eligible end users at a spread “not more than 1.5 percent above the purchase price.”
In its continuous efforts to boost the local currency, the CBN’s strategy has been scrutinised, with some analysts suggesting it may come at the expense of foreign exchange, which has experienced a notable decline amid the naira’s appreciation.
“All eligible BDCs are therefore directed to commence payment of the Naira deposit to the underlisted CBN Naira Deposit Account Numbers from today, Monday April 22, 2024, and submit confirmation of payment, with other necessary documentations, for disbursement of FX at the respective CBN Branches,” the circular further specified.