CBN orders BDC operators to sell $1 for no more than ₦1,269

The Central Bank of Nigeria (CBN) has instructed bureau de change (BDC) operators to trade at a fixed rate in the foreign exchange market.

The CBN is desperate to reform the foreign exchange market and boost the naira's value.

The director of the bank's trade and exchange department, Dr Hassan Mahmud, directed in a memo, dated March 25, 2024, that each approved BDC operator is to receive a maximum of $10,000 at the rate of ₦1,251/$1.

"The BDCs are to sell to eligible end users at a spread of not more than 1.5% above the purchase price," he said.

This means the most any BDC operator buying from the CBN is allowed to sell to customers is ₦1,269/$1.

"Please note that any BDC that breaches above terms shall be sanctioned appropriately, including outright suspension from further participation in the sale," Mahmud warned.

The CBN has launched numerous efforts to reform the forex market and arrest the depreciation of the naira which sold for nearly ₦2,000/$1 just weeks ago. The bank has struggled for many years to control the operations of BDCs, blamed for some of the currency's troubles.

On March 1, the bank announced it was revoking the licences of 4,173 BDC operators for failing to follow at least one of three regulatory provisions. The provisions are:

1. Payment of all necessary fees, including licence renewal, within the stipulated period in line with the guidelines.

2. Rendition of returns in line with the guidelines.

3. Compliance with guidelines, directives and circulars of the CBN, particularly Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) and Counter-Proliferation Financing (CPF) regulations.

This is the second consecutive month the CBN is selling to BDCs at a fixed market rate. In February, the bank sold $20,000 to each BDC operator at the rate of ₦1,301/$1, with the instruction to sell to customers at no more than 1% above the purchase price.