Nigeria addresses currency pressure by resuming dollar sales to BDCs

The Central Bank of Nigeria (CBN) has resumed the sale of U.S. dollars to Bureau de Change (BDC) operators to counter the ongoing depreciation of the naira. 

This decision comes after the naira recently fell to a low of NGN1,639 per dollar, largely due to increased demand for U.S. dollars for business and travel purposes. 

By selling dollars to money changers, the CBN aims to stabilise the naira amidst persistent foreign exchange shortages. 

To support this effort, the CBN announced that approved BDCs would be allocated $20,000 at an exchange rate of NGN1,580 per dollar. 

These sales are intended to meet retail demand for “eligible invisible transactions” such as travel allowances, medical bills, and school fees. 

Outlining the conditions, the CBN stated, “All BDCs are allowed to sell to eligible end-users at a margin of not more than 1% above the purchase rate from the CBN.” 

BDCs interested in this transaction are required to make naira payments to the CBN Deposit Account Numbers and submit their documents at its branches in Abuja, Aba, Kano, and Lagos. 

This is not the first instance of the CBN stepping in to stabilise the naira. 

In July, the central bank took similar action when the naira hit a previous low. 

At that time, the CBN sold U.S. dollars to BDCs at NGN1,450 per dollar and provided authorised-dealer banks with over $100 million at rates between NGN1,498 and NGN1,530. 

Prior to that, the CBN injected more than $80 million in May to ease currency volatility and forex shortages.