In a bid to regulate the foreign exchange market and curb exchange rate fluctuations, the Central Bank of Nigeria (CBN) has directed Bureau de Change (BDC) operators to sell the dollar at a capped rate of N1,269 per dollar.
This directive was communicated through a circular issued by Dr. Hassan Mahmud, Director of the CBN’s Trade and Exchange Department, and made available to The PUNCH on Monday. The circular stipulates that each BDC will be allocated $10,000 at the rate of N1,251 per dollar, with a provision that they sell to eligible customers at a maximum rate not exceeding 1.5 percent above the purchase price, equivalent to N1,269 per dollar.
This move comes in the wake of the CBN’s decision to discontinue the sale of foreign exchange to BDCs in July 2021, citing violations of foreign exchange regulations and the trading of wholesale amounts exceeding $5,000. However, in February, the CBN announced a resumption of foreign exchange sales to eligible BDC operators, with each operator entitled to $20,000.
The decision to mandate BDCs to sell dollars at a fixed rate aligns with efforts to stabilize the exchange rate and combat inflation. The Nigerian naira maintained a steady appreciation against the US dollar, closing at 1,408 per dollar in the official market on Monday.
In the circular, the CBN emphasized its commitment to regulating the foreign exchange market and ensuring stability. The directive underscores the central bank’s strategy to bolster reserves, improve liquidity, and instill confidence in the banking system and the economy.
Olayemi Cardoso, the CBN Governor, outlined a comprehensive strategy last month aimed at curbing inflation and stabilizing the exchange rate. Through measures implemented during the Monetary Policy Committee meeting and engagements with foreign portfolio investors, the CBN aims to boost reserves and enhance liquidity in the foreign exchange market.
Marcel Okeke, former Chief Economist of Zenith Bank, highlighted the importance of increased dollar supply to stimulate economic growth. Analysts posit that the CBN’s efforts to enhance liquidity in the financial system will contribute to stabilizing the foreign exchange market and fostering economic recovery in Nigeria.
