CBN Sets Forex Rate for BDCs, Implements Measures to Curb Exchange Rate Distortions

by David Okoye
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The Central Bank of Nigeria (CBN) has directed bureau de change (BDC) operators to buy forex at a rate of N1,301 per dollar and sell at a maximum margin of one percent profit. This decision aims to address price distortions in the retail market, which contribute to widening exchange rate premiums.

According to Hassan Mahmud, a director at the Trade and Exchange Department of the CBN, the move comes as part of ongoing reforms in the foreign exchange market to achieve a market-determined exchange rate for the naira. The CBN observed persistent price distortions in the retail market, prompting the decision to sell forex to BDCs to meet retail demand for eligible invisible transactions.

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Under the new directive, each BDC will be allocated $20,000 at the rate of N1,301 per dollar, representing the lower band rate of executed spot transactions at NAFEM for the previous trading day. BDCs are required to make payments to designated CBN foreign currency deposit naira accounts and submit necessary documentation for disbursement at specified CBN branches in Abuja, Awka, Lagos, and Kano.

Furthermore, the CBN emphasized that BDCs must sell forex to end-users at a margin not exceeding one percent above the purchase rate from the CBN. This measure aims to ensure fair pricing and prevent excessive profiteering in the forex market.

The directive underscores the CBN’s commitment to maintaining stability and transparency in the forex market amid ongoing reforms. By setting a standardized exchange rate for BDCs and implementing measures to curb distortions, the CBN seeks to promote confidence and efficiency in Nigeria’s foreign exchange operations.

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