The Central Bank of Nigeria (CBN) said on Monday that it has started selling foreign exchange to Bureau De Change (BDC) operators at a rate of N1251/$1, a calculated strategic move meant to support the naira.
This was stated in an apex bank circular to the BDCs, which told them that each operator had purchased $10,000 from the bank at a rate of N1,251 per dollar.
Additionally, CBN instructed each BDC’s operators to sell the dollars to qualified clients at a price not to exceed 1.5% over the acquisition price.
The document titled: “Sales of FX to BDCS to Meet Retail Market Demand for Eligible Invisible Transactions read: “We refer to our letter to you referenced TED/DIR/CON/GOM/001/071 in respect of the above subject wherein the CBN approved a second tranche of sale of FX to eligible BDCs.
“We write to inform you of the sale of $10,000 to each BDC at the rate of N1,251/51. The BDCs are to sell to eligible end users at a spread of NOT MORE THAN 1.5 per cent above the purchase price.
“All eligible BDCs are directed to make the naira payment to the underlisted CBN Naira Deposit Account Numbers before close of business on Thursday March 28, 2024, and submit confirmation of payment, with other necessary documentation, for disbursement at the appropriate CBN Branches:”
According to analysts, the apex bank’s measures are having a beneficial effect, as seen by the naira’s weekly appreciation of 12% to close at N1,431.49/$1 on the Nigerian Autonomous Foreign Exchange Market (NAFEM). The naira has gained significantly in the past week after plunging to more than N1,000/$1 in February.
With $195 million in total foreign exchange sales during the past seven days, the apex bank has stepped in three times.
The official exchange rate setting website, FMDQ, provided the data that showed the NAFEM window’s activity level rising 47.2% w/w to $1.5 billion. In the foreign exchange market, the Naira gained 6.7% against the dollar while appreciating 12% against the dollar, reaching N1,431.49/$1.
The NAFEM’s total turnover as of March 21, 2024, was $1.21 billion, up 16.4% week-to-date (WTD). Trades were completed within the N1,300.00–N1,640.00/$ range. The naira rates appreciated in the forwards market for the 1-month (+9.6% to N1,460.81/$), 3-month (+9.4% to N1,500.26/USD), 6-month (+8.4% to N1,562.99/$), and 1-year (+6.5% to N1,705.82/USD) contracts.