Dollar Crash: Pressure Mounts On FX Hoarders To Sell Off

Posted by Samuel on Wed 27th Mar, 2024 - tori.ng

The apex bank had last month announced its decision to sell foreign exchange worth $20,000 to each eligible Bureau De Change operator across the country.

Naira

The pressure on individuals, banks, and Bureaux de Change (BDC) operators to divest themselves of excess dollars and other foreign currencies shows no sign of easing, as the array of policy measures implemented by the Central Bank of Nigeria (CBN) remains firmly entrenched.

The naira which last month fell to a low of N1,778.25 to the dollar, weighed down by high demand for the U.S. currency and outstanding forwards on the currency that needed to be settled by the Central Bank bounced back during the week , firming to N1,312.51 per dollar at the weekend, after the CBN said late on Wednesday it had cleared its entire verified foreign exchange backlog.

A BDC operator, Mallam Yakubu Salisu, said ‘people “are willing to exchange their dollars now more than ever before because of fears that it might crash further in the coming days.”

The apex bank had last month announced its decision to sell foreign exchange worth $20,000 to each eligible Bureau De Change operator across the country.

The development came three years after the former CBN governor, Godwin Emefiele, announced the suspension of foreign exchange sales to BDC operators.
According to data obtained from the CBN website, there are 5,690 BDC operators nationwide.

However, about 1,373 BDC operators have been screened to get the allocation. The breakdown includes Abuja, 186; Awka, 26; Kano, 376; Lagos, 785.

On July 27, 2021, the CBN discontinued the sale of foreign exchange to BDCs accusing them of trading FX wholesale that amounts greater than USD 5000, in contravention of their licences, and Nigeria’s FX regulations.

The latest circular, “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions” approved resumption of sale of dollar to BDC operators

It noted that the move aimed at rectifying the persisting distortions in the retail segment of Nigeria’s foreign exchange market and bridge the widening gap in the exchange rate.

It said the allocation would be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market as of the previous trading day, dated February 27, 2024.

This means BDCs will buy at N1,301 and sell at ₦1,314.01.