The Central Bank of Nigeria’s (CBN) decision to sell dollars to Bureau De Change (BDC) operators below market rate has caused a rift among financial experts; some argue that the move lacks transparency, while others assert that it will increase FX market liquidity.
This was the third effort at selling dollars to BDCs below market value, at N1,101/$1, following a protracted suspension by the Central Bank of Nigeria (CBN) in 2021.
In a special interview with Nairametrics, the experts discussed their conflicting opinions regarding the initiative’s viability.
Citing the Central Bank of Nigeria’s (CBN) inability to create an effective and transparent single foreign exchange market, some observers faulted the CBN’s management of the Naira floating policy.
The selective sales of hard currency by the CBN to banks and Bureau de Change operators, they pointed out, lack transparency and sustainability, underscoring the significance of market processes in the effective allocation of resources.
Others, on the other hand, are in favor of CBN selling foreign exchange to Bureau de Change operators. Although they acknowledge the short-term advantages, they suggest the CBN concentrate on increasing foreign exchange profits to protect reserves.
The initiative’s durability, in their opinion, depends on improved oversight and larger foreign exchange reserves.
According to a recent article in The News Chronicles, the Central Bank of Nigeria (CBN) notified Bureau De Change operators (BDCs) through a circular that $10,000 would be sold to each BDC at a rate of N1,101/$1.
The circular states that each BDC must sell the dollars to qualified clients at a markup of no more than 1.5% over the acquisition price.
This implies that a BDC’s sales price of N1,117/$1 is not anticipated. Based on information from the Nigerian Autonomous Foreign Exchange Market (NAFEM), the selling rate is lower than the N1,251.05/$1 that was recorded after the previous week.
After the central bank suspended foreign exchange sales to BDCs for an extended period in 2021, this is the CBN’s third attempt to do so. After the licenses of more than 4173 BDC operators were revoked in February of this year, the restriction was removed earlier in the year.
