The Central Bank of Nigeria (CBN) has announced the approval of the sale of an additional $20,000 to each eligible Bureau de Change operator (BDC) in the country.
This is according to a circular released on September 25, 2024, signed by Dr. W.J. Kanya, the Acting Director of the CBN’s Trade & Exchange Department.
According to the circular, the CBN approved the sale of $20,000 per eligible BDC at a rate of N1,590 per US dollar.
The rate is N10 higher than the previous rate for the $20,000 sold to each BDCs earlier this month.
CBN limits BDCs profit margins
The circular further outlines that BDC operators are allowed to sell this foreign exchange to eligible end-users at a margin not exceeding 1% above the CBN’s purchase rate.
This directive is intended to ensure transparency and limit excessive profit margins on foreign exchange transactions.
- Eligible BDCs interested in participating in this transaction are instructed to make the necessary naira payment to their respective CBN deposit account numbers.
- They are required to submit payment confirmation and all related documentation at designated CBN branches for disbursement of the $20,000.
- The circular read: “This is to inform the Bureau De Change (BDC) Operators and the general public that the CBN will be providing additional liquidity to this segment of the foreign exchange market.
- “To this end, the CBN has approved the sale of US$20,000.00 to each eligible BDC at the rate of N1,590/$. This is to meet the demand for invisible transactions.
- “All BDCs are allowed to sell to eligible end-users at a margin of NOT MORE THAN one percent (1%) above the purchase rate from CBN.
- “Eligible BDCs interested in this transaction are directed to make the Naira payment to the CBN Deposit Account Numbers with them. Also, payment confirmation and all necessary documentation for disbursement are to be submitted at the appropriate CBN Branches – (ABUJA, AWKA, KANO and LAGOS) for collection of the US$20,000.00.”
What you should know
This move by the CBN is expected to provide a much-needed boost in foreign exchange liquidity within the retail market segment, particularly for personal and business transactions classified as invisible.
- Invisible transactions typically refer to services and intangible goods such as payments for education, medical expenses abroad, or personal travel allowances, which do not involve physical goods crossing borders.
- While this is the second time the CBN is selling foreign exchange to BDCs this month, it is the seventh sale this year.
- With 1,583 approved BDC operators, this move may cost the CBN up to $63.32 million this month for the two sales.