The Central Bank of Nigeria (CBN) has announced a second intervention this month, allowing licensed Bureau De Change (BDC) operators nationwide to purchase $10,000 each. In a circular to the Association of Bureau De Change Operators (ABCON), the CBN specified that BDCs can buy dollars at the rate of N1,021 per dollar and sell to eligible end users at a maximum spread of 1.5 percent above the purchase price, setting the maximum selling price at N1,036.15 per dollar.
Earlier in April, the CBN sold $10,000 FX to each of the 1,588 participating BDCs at a fixed rate of N1,101 per US dollar, limiting potential profits to approximately N1,116.15 per dollar. The latest circular requires BDCs to immediately deposit the Naira equivalent for their allocated $10,000 into designated CBN Naira Deposit Accounts, along with necessary documentation for forex disbursement at respective CBN branches.
Market participants are likely to cautiously welcome the CBN's latest intervention, aimed at improving access to forex for legitimate transactions and potentially easing pressure on the parallel market. However, the effectiveness of this strategy depends on factors such as meeting current forex demand, BDCs adhering to the stipulated selling price to ensure transparency, and addressing underlying forex scarcity causes for long-term market stability.
The CBN's actions since February 2024 highlight ongoing efforts to manage forex liquidity and ensure market stability. Continued monitoring and adjustments, along with a more market-driven approach to forex allocation, will be crucial for the success of this strategy in the long run.
