The Central Bank of Nigeria (CBN) has excluded Bureau De Change (BDC) operators from its latest allocation of $122.67 million in forex sales.
This decision, announced by Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria, shows the CBN’s evolving strategy towards a more controlled and stable forex environment.
The CBN’s allocation, disclosed in a statement signed by Dr. Omolara Duke, Director in charge of Financial Markets, specified that the forex sales were made exclusively to 46 authorized dealers, predominantly banks.
This is a continuation of the CBN’s recent trend of sidelining BDC operators, a practice that began in March of this year.
In an interview, Gwadebe explained the exclusion as part of the CBN’s usual intervention at the NAFEM window, which currently only includes banks.
He noted, “The BDC window has been suspended by the Central Bank of Nigeria since around March or so. The last time we were funded, I think, was around March.”
This shift reflects the apex bank’s intent to reduce market volatility and enhance the efficiency of forex distribution.
The exclusion of BDCs from the forex sales has already impacted the market. The naira depreciated further to N1,554/$ at the official market on Thursday.
The CBN’s strategy aims to centralize forex sales through banks, thereby tightening control over the distribution and use of foreign currency.
The CBN’s recent allocation occurred over two days. On Wednesday, the apex bank sold $67.5 million to 27 authorized dealers while purchasing $2.5 million from one authorized dealer.
The bid range for these transactions was between N1,480/$1 and N1,500/$1, with payments scheduled for July 12, 2024.
On Thursday, the bank sold $55.17 million to 19 authorized dealers at a rate of N1,540/$1, with payments due on July 15, 2024.
The CBN emphasized that all forex purchases by authorized dealers must be used exclusively for trade-backed transactions, which must be reported within 72 hours.
This directive aims to ensure the effective use of foreign exchange and prevent market abuses.
The latest forex sales come when Nigeria’s external reserves have seen a positive increase to $35.05 billion as of July 8, 2024.
This is the first time the reserves have crossed the $35 billion threshold under President Bola Tinubu’s administration, reflecting a cautiously optimistic outlook for the nation’s economic stability.
However, the exclusion of BDC operators from the forex sales has raised concerns among stakeholders about the long-term implications for the forex market and the availability of foreign currency for small and medium-sized enterprises that rely on BDCs for their forex needs.