• Sunday, July 14, 2024
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BusinessDay

Nigeria’s central bank to supply $100m to BDCs next week

forex

The Central Bank of Nigeria (CBN) is expected to supply about $100 million to 5,000 Bureau De Change (BDC) operators across the country as it resumes dollar sales to them on Monday.

The CBN chose a gradual foreign exchange supply of $10,000 twice a week to BDCs to edge out speculation in the market.

With the new amount of FX allocation, the BDCs are losing about 73.3 percent or $55,000 when compared to $75,000 they were getting from the CBN before the outbreak of Covid-19 pandemic.

Consequently, the BDC operators are warming up to fund their accounts on Friday in anticipation of the forex allocation on Monday by the CBN.

Aminu Gwadabe, national president, Association of Bureau De Change Operators of Nigeria (ABCON), said the $20,000 weekly FX allocation is at first instance as the CBN watches developments in the market.

“I believe that clause is to allow the CBN flexibility and intervention in the market where necessary to checkmate unethical practices of hoarding and speculation. I believe both operators should be wary of the CBN surprises to avoid taking losses,” Gwadabe told BusinessDay.

The CBN had last Thursday informed the general public that gradual sales of foreign exchange to licensed BDC operators would commence with effect from September 7, 2020.

Consequently, the nation’s currency has strengthened by N40 as the dollar was sold at N440 on the black market on Tuesday as against N480 sold last week.

Naira recorded N15 appreciation between morning and afternoon as the dollar traded at N455 around 9.40am and N440 around 2.23pm on Tuesday.

The foreign exchange market opened on Tuesday with an indicative rate of N386.03k, representing N0.47k appreciation over the dollar, which stood at N386.50k at Monday’s opening of the Investors and Exporters (I&E) forex window.

After trading on Tuesday, the market closed with naira losing N0.33k as the dollar was being quoted at N386.00k as against N385.67k quoted on the previous day at the I&E window, data from the FMDQ indicated.

The FX daily turnover rose by 306.82 percent to $58.46 million on Tuesday from $14.37 million recorded on Monday.

At the retail bureaux, naira firmed by N1.00k as the dollar was sold at N465 on Tuesday compared with N466 sold on Monday.

The apex bank, in a circular signed by Ozoemena Nnaji, director, trade and exchange department, announced the applicable exchange rate for the disbursement of International Monetary Transfer Operators (IMTOs) proceeds as follows: IMTOs to sell to banks at N382 per dollar, banks to CBN at N383 per dollar, CBN to BDCs at N384 per dollar, and BDCs to end-users at not more than N386 per dollar.

According to the CBN’s circular, purchase of foreign exchange by BDCs would be on Mondays and Wednesdays in the first instance. The BDCs are to ensure that their accounts with the banks are duly funded with the equivalent naira proceeds on Fridays and Tuesdays, accordingly.