CBN Sidelines BDCs From $122.67M Forex Allocation, Association Head Says

The Central Bank of Nigeria (CBN) has sidelined Bureau De Change (BDC) operators from its latest allocations. This was disclosed by Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria.

“It is their usual intervention at the NAFEM window which presently excludes the BDCs but is only for banks,” he said.

The exclusion of BDCs from forex allocations began in March and has, since then, raised concerns. CBN’s latest $122.67 million forex allocation focused solely on 46 authorised dealers, majorly on banks. This move is reportedly aimed at stabilising Nigeria’s foreign exchange market by centralising forex sales through banks. The allocation was announced in a statement by Dr Omolara Duke, Director of Financial Markets, as part of its broader efforts to manage market volatility.

The statement read in part, “The Central Bank of Nigeria has sold the sum of $122,671,000 to 46 authorised dealers in its determination to promote stability and reduce market volatility in the foreign exchange market.”

The forex sales took place over two days, with $67.5 million sold to 27 dealers on Wednesday and $55.17 million sold to 19 dealers on Thursday. The transactions were conducted at bid ranges between N1,480/$1 and N1,540/$1, with payments scheduled for mid-July 2024.

The CBN has also mandated that all forex purchases by authorised dealers be used exclusively for trade-backed transactions, reported within 72 hours, to ensure effective use and prevent market abuses.

The exclusion of BDCs has further contributed to the depreciation of the naira to N1,554/$1 at the official market. The CBN has justified this approach as necessary for reducing volatility and improving the efficiency of forex distribution. However, this shift has raised concerns among stakeholders about the availability of foreign currency for small and medium-sized enterprises reliant on BDCs for their forex needs.

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