Dollar Notes 

The Central Bank of Nigeria resumed selling foreign exchange to eligible Bureau De Change operators on Thursday, as the naira dropped to 1,570/$ in the parallel market.

The CBN sold dollars to BDCs at a rate of 1,450/$.This was revealed in a statement signed by AA Mahdi on behalf of the acting director of the Trade and Exchange Department at the CBN.

The apex bank said, “Following the ongoing reforms in the foreign exchange market, with the objective of achieving an appropriate market-determined exchange rate for the naira, the Central Bank of Nigeria” has observed the continued distortions in the retail end of the market.

“To this end, the CBN has approved the sale of FX to eligible Bureau de Change to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,450 (representing the lower band of the trading rate at NAFEM in the previous trading day).”

It cautioned BDCs to sell to eligible end-users at a margin not exceeding 1.5 percent above the purchase rate from the CBN.The dollar, which had traded as low as 1,640/$, settled at 1,570/$ in the parallel market after closing Wednesday’s trading at 1,565/$.

Investigations by The PUNCH revealed that the naira was trading between 1,620/$ and 1,630/$ on the black market.Data from the London Stock Exchange Group indicates that on Wednesday, the naira dropped to a four-month low of 1,612.50/$ on the official market.

In Abuja, BDC operator Mohammed Magaji mentioned that he was selling dollars at 1,630/$ and willing to buy at 1,620/$.

When asked about the reason for the change in the exchange rate, Magaji simply responded: “That is the way the market is today.”

Another operator, Taura Abdusalam, declared, “I sell dollars at 1,620/$ and I can buy at 1,620/$.”

The President of the Association of Bureau de Change of Nigeria, Aminu Gwadebe, while speaking with The PUNCH, attribute the decline on “acute shortages, speculative activity, public hedging to guide inflation, and the surge in demand from recent duty waivers on certain critical food imports.”

He added that the rate had since started to retreat, adding: “The rates came down from N1640/$ to N1570/$ and the trajectory remained positive.”

At the end of trading on Thursday, the naira closed at 1,566.82/$ on the official National Autonomous Foreign Exchange Market, with a turnover of $273.14 million, an improvement from Wednesday’s rate of 1,581.65/$ and a turnover of $108.16 million.

Regarding the resumption of forex sales to BDCs, Gwadebe noted that selling $20,000 to BDCs would help ease market liquidity.

Gwadebe noted, “The review of the return of sales of FX to BDCs is commendable and a manifestation of the policy stress test in addressing the myriad challenges confronting the retail end FX market.

“It will help to induce liquidity and enhance confidence in the market.The increase in demand pressure due to recent fiscal policies, such as duty waivers and the removal of import duties on certain basic necessities, will undoubtedly be intensified by the resumption of FX sales to BDCs.“

“The BDCs will continue to play their third-level roles in the retail end of the market and will remain the potent and most effective tool of the CBN’s demand monitoring mechanism and meet the critical liquidity needs in the Fx market.”

The ABCON chairman urged association members to adhere to regulations to ensure the survival and continued success of the sub-sector.

He also called on the Government to continue to collaborate with stakeholders in their strategy and tactics to tackle the challenges facing the country.

“I also appeal to the CBN to continue to look into our appeals in allowing all our members illegible and Eligible to come together and form new partnerships in line with their new regulations 2024 on BDCs. We believe that will make the market liquid and stable,” he added.

The new forex sales to BDCs followed the CBN’s recent sale of approximately $122.67 million to 46 authorized dealers.Tl

The central bank revealed that $67.50 million of the total was sold to 27 dealers, while $2.5 million was purchased from one authorized dealer on July 10, 2024.

These transactions on July 10 ranged between N1,480/$ and N1,500/$.Additionally, on July 11, 2024, $55.17 million was sold to 19 authorized dealers at a rate of 1,540.0/$, with no forex purchased on that day.

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