The Central Bank of Nigeria (CBN) might spend up to $110.81 million selling foreign money (FX) to authorized Bureau De Change (BDCs) this year.
So far, CBN has sold FX five times to these BDCs. If all 1,583 approved BDCs buy from CBN, this amount will be used up.
This information comes from CBN’s announcements about selling FX to BDCs.
Between February and July 2024, the CBN offered a total of $70,000 to BDCs for sale.
How the sales worked
In 2021, CBN stopped selling FX to BDCs for a long time, but they started again this year. They also took away licenses from over 4,173 BDC operators in February 2024.
- On Thursday, July 18, 2024, CBN said they will sell FX to BDCs to help with invisible transactions. Each BDC can buy $20,000 at a rate of N1,450 per $1. This rate is lower than the previous day’s trading rate at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
But, this rate is higher than any rate CBN has sold FX to BDCs before, showing how the local currency has dropped in value this year.
If all BDCs buy this cheaper FX from CBN, it could cost $31.66 million. This means the total for the five FX sales would be $110.81 million.
The latest sale comes when the naira is under pressure, nearing N1,600 per $1.
Important things to know
- In April, Yemi Cardoso, the CBN governor, said sales to BDCs are small and focused on making them a part of the larger market.
- Besides selling to BDCs, CBN also sells FX on the official market.
- In May 2024, the naira grew in value two times on the official market. This happened because CBN sold more dollars there, expecting a $1.3 billion non-deliverable forward (NDF) maturing on May 29, 2024.
- Some sources said CBN went back to an older plan of selling FX at rates lower than the market, to lower the exchange rate artificially.
- Earlier this month, CBN sold $122.67 million to 46 authorized dealers, aiming to stabilize the market and reduce currency volatility as the naira dropped to its lowest level since March 2024.