CBN advises BDCs To Resell FX At a 1.5% Mark-up

THE Central Bank of Nigeria (CBN) has issued a warning, stating that BDCs must sell to qualified end users at a spread of no more than 1.5% above the acquisition price in order to further depress the FX rate.

The CBN's decision to start selling foreign exchange (FX) in the second tranche to qualified Bureau De Changes (BDCs) in order to satisfy demand from the retail market is what prompted the caution.

The apex bank notified the President Association of Bureau De Change Operators of Nigeria in a memo on Monday that $10,000 had been sold to each BDC at a rate of N1,251/$1.

In a memo dated March 25, 2024, and bearing reference TED/DIR/CON/GOM/001/072, Dr. Hassan Mahmud, Director of the Trade & Exchange Department, instructed all qualified BDCs to transfer Naira funds to one of the designated CBN Naira Deposit Account Numbers by the end of business on Thursday, March 28, 2024. Subsequently, they were to submit the payment confirmation along with the required documentation for distribution at the relevant CBN Branches.

“We refer to our letter to you referenced TED/DIR/CON/GOM/001/071 in respect of the above subject wherein the CBN approved a second tranche of sale of FX to eligible BDCs," the memo titled “Sales of FX to BDCS to meet retail market demand for eligible invisible transactions,” states, in part.

“We write to inform you of the sale of $10,000 to each BDC at the rate of N1,251/51. The BDCs are to sell to eligible end users at a spread of NOT MORE THAN 1.5 per cent above the purchase price.

“All eligible BDCs are directed to make the Naira payment to the under-listed CBN Naira Deposit Account Numbers before the close of business on Thursday, March 28, 2024, and submit confirmation of payment, with other necessary documentation, for disbursement at the appropriate CBN Branches.”

The CBN issued a warning, stating that any BDC that violates the terms will face appropriate consequences, which may include being completely barred from participating in the sale going forward.