CBN slashes BDC exchange rate to N1, 036.3/$

The Central Bank of Nigeria, CBN, yesterday for the second time in two months, slashed the exchange rate in the Bureaux De Change, BDC,   segment of the forex market by 7.2 per cent or N81.2 to N1,036.3   per dollar even as it commenced another round of dollar sale to 1,583 eligible BDCs.

The CBN announced the new rate in a circular saying it will sell $10,000 to each BDC at N1,021 per dollar, for eligible invisible transactions, directing that the BDCs should sell to eligible end-users at a spread of not more than 1.5 percent.

This means BDCs will sell to end users at a maximum exchange rate of N1,036.3 per dollar.

Announcing the new rate in a circular today, Dr. Hassan Mahmud, Trade and Exchange Department, CBN said: “We write to inform you of the sale of $10,000 by the Central Bank of Nigeria (CBN) to BDCs at the rate of N1,021/$1. The BNCs are in turn to sell to eligible end users at a  spread of NOT MORE THAN 1.5 percent above the purchase price.

“All eligible BDCs are therefore directed to commence payment of the Naira deposit to the underlisted CBN Naira Deposit Account Numbers from today, Monday April 22, 2024 and submit confirmation of payment, with other necessary documentations, for disbursement of FX at the respectivCBN Branches.

All BDCs are advised to continue to abide by the rules and conditions as stipulated in  our earlier letters/operational guidelines.”

The above development represents the third time the CBN will be selling dollars to BDCs this year. It also represents the second time the apex bank will be reducing BDC exchange rate.

The apex bank in 2021 had suspended dollar sale to BDCs citing malpractices by operators.

But in a bid to address exchange rate distortion in the retail segment of the forex market, the CBN on February 27th, announced resumption of dollar sales to BDCs to meet retail demand for eligible invisible transaction.

In the first round, the CBN sold $15.7 million   785 BDCs, at $20,000 per BDC,   at  the rate of N1,301/$, directing that the dollars should be sold to end-users at a margin not more than one percent (1 %) above the purchase rate from CBN which is N1,314.01 per dollar.

In the second round, the CBN sold $15.88 million to 1,588 BDCs at $10,000 per BDC, at  N1, 101 per dollar, directing that the BDCs should sell to eligible end-users at spread of not more than 1.5 percent. This means BDCs will sell to end users at maximum of exchange rate of N1, 117.5 per dollar.

Combined with the $15.83 million to be sold to 1,583 BDCs in the third round, the CBN has injected $47 million into the retail segment of the forex market in two months, while also slashing the BDC exchange rate by 21 per cent of N277 to N1, 314 per dollar from N1, 313.01 per dollar.