In order to satisfy the demand for invisible transactions, the Central Bank of Nigeria (CBN) has authorised the selling of foreign exchange (FX) at a rate of N1,590 per dollar to qualified bureau de change (BDC) operators.
The CBN said Wednesday that it will sell $20,000 to each BDC at the rate of N1,590/$ in a circular headlined ‘Sales of Foreign Exchange to BDCs to Meet Retail Market Demand for Eligible Invisible Transactions,’ signed by W.J Kanya, acting director, trade and exchange department.
The central bank declared, “This is to inform the Bureau De Change (BDC) Operators and the general public that the CBN will provide additional liquidity to this segment of the foreign exchange market.”
“To this aim, the CBN has approved the sale of US$20,000.00 to each qualifying BDC at a rate of N1,590/5.This is to address the demand for anonymous transactions.
“All BDCs are allowed to sell to approved end-users at a margin of NOT MORE THAN one percent (1%) above CBN’s buying rate.”Eligible BDCs interested in this transaction are directed to make the Naira payment to the CBN Deposit Account Numbers with them.”
In Essence
This move seems designed to inject liquidity into a highly volatile FX market, where dollar demand has significantly outstripped supply. Given Nigeria’s longstanding challenges with FX shortages, rising parallel market rates, and pressures on the naira, this action may temporarily ease the strain for those seeking dollars for legitimate, small-scale needs.
However, the exchange rate set by the CBN (N1,590/$) represents a significant deviation from the previous official and parallel market rates.
This difference might encourage arbitrage, where traders exploit the gap between CBN’s rate and the black-market rate, making it difficult for the central bank to maintain stability in the long run.
Furthermore, selling dollars at this high rate could have inflationary consequences, especially for a country already battling high inflation, as it could drive up costs for imports and essential goods.
