Business

CBN: Dollar sales to BDCs resume August 31

Published

4 years ago

August 28, 2020

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TRACKING___The Central Bank of Nigeria (CBN) has announced that it will resume what it describes as “gradual” sales of dollars to Bureau De Change (BDC) operators on Monday, August 31, 2020. In two circulars to BDC operators, authorised dealers and service providers seen by New Telegraph yesterday, the apex bank said it will sell dollars to the BDCs at a rate of N384/$1 while the BDCs are to sell to end users at not more than N386 per dollar. Specifically, in the first circular titled, “Weekly exchange rate for disbursement of proceeds of International Money Transfer Service Operators,” the CBN stated that the, “Applicable exchange rate for the disbursement of proceeds of IMTOs for the period Monday August 31 to Friday September 4, 2020 is as follows: IMTSOs to banks- N382/1USD; banks to CBNN383/ 1USD; CBN to BDCs- N384/1USD and BDCs to end-users-Not more than N386/1USD.”

The regulator further stated that the volume of sales for each market is $10,000 per BDC, adding that the rate of the Pound should be derived, “from the USD cross rate on the date of sale.” In the second circular, the CBN said the gradual sales of forex to licensed BDCs operators, which will commence with effect from August 31, 2020, follows the Federal Government’s announcement of the resumption of international flights. According to the statement: “Purchase of foreign exchange by BDCs shall be on Mondays and Wednesdays in the first instance. The BDCs are to ensure that their accounts with the banks are duly funded with equivalent naira proceeds on Fridays and Tuesdays, accordingly.”

The regulator added that all Deposit Money Banks (DMBs) will continue to sell foreign currencies for travel related transactions to customers and non-customers, “over the counter upon presentation of relevant travel documents (passport, air ticket and visa).” It warned that any case of infraction of forex regulations by lenders and BDCs will be, “appropriately sanctioned.” The CBN had, on March 26, suspended the sale of forex to BDCs, following the Federal Government’s introduction of measures to contain the spread of the coronavirus (COVID-19) pandemic, which included the banning of domestic and international flights.

Analysts said the BDCs’ absence from the forex market has been a key factor in the naira’s plunge against the dollar on the parallel market in recent months. While the naira/dollar exchange rate on the official window and the Investors and Exporters’ (I&E) window is N380 per dollar and N386/$1 respectively, the local currency trades at 477 per dollar on the parallel market.

In a report obtained by New Telegraph on Monday, analysts at Cowry Asset Management Limited, said: “We feel that the widened disparity between different exchange rates should shrink if CBN reintroduces the sale of foreign currency to Bureau De Change.” Also, former Governor of the CBN, Muhammad Sanusi, in July, asked the apex bank to provide funding for BDCs in order to stabilise the naira value. Sanusi said that though the BDC is a small percentage of the market, funding it will impact speculation on the country’s currency.

He said the existing gap between rates in the I&E and BDC segments of the forex market can be traced to inadequate forex supply.