CBN resumes dollar sale to BDCs at ₦1,450/$1
The Central Bank of Nigeria has approved the sale of foreign exchange 20,000 dollars each to eligible Bureau de Change operators at a rate of 1,450 naira to the U.S dollar. The apex bank notes the continued distortions in the retail end of the market is feeding into the parallel market and further widening the exchange rate premium. Aminu Gwadabe, President of the Association of Bureau de Change Operators of NIgeria joins CNBC Africa for more.
Fri, 19 Jul 2024 11:39:56 GMT
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AI Generated Summary
- The Central Bank of Nigeria resumes dollar sales to BDCs at a rate of ₦1,450 to the U.S dollar to address market distortions.
- Bureau de Change operators play a vital role in facilitating retail transactions and ensuring market efficiency.
- Challenges remain for BDCs in meeting new capital requirements, underscoring the need for collaboration with regulatory authorities.
The Central Bank of Nigeria has announced the resumption of the sale of foreign exchange to eligible Bureau de Change operators at a rate of ₦1,450 to the U.S dollar. This move comes as a response to the ongoing distortions in the retail end of the market, which have been fueling the parallel market and widening the exchange rate premium. Aminu Gwadabe, the President of the Association of Bureau de Change Operators of Nigeria, commended this intervention, highlighting the positive impact it has already had on stabilizing the exchange rate.
One of the key issues addressed in the interview was the role of Bureau de Change operators in the market's structure. Gwadabe emphasized the importance of clear demarcation between the different levels of the market, including the Central Bank, commercial banks, and BDCs. He noted that BDCs play a critical role in facilitating retail transactions and highlighted the effectiveness of their operations in response to the latest intervention by the Central Bank.
Moreover, Gwadabe discussed the ongoing concerns regarding FX misalignment and the fair value of the Naira. He underscored the need for fiscal discipline and highlighted the impact of corruption on economic stability. Gwadabe expressed optimism about the trajectory of the Nigerian economy, citing various policy changes aimed at enhancing productivity and attracting foreign investment.
Additionally, the interview delved into the challenges faced by BDCs in meeting the Central Bank's new minimum capital requirements. Gwadabe acknowledged the high capitalization requirements and ongoing negotiations with the Central Bank to ensure the inclusion of all BDC members in the regulatory framework. Despite the hurdles, he called for continued collaboration and expressed confidence in a mutually beneficial outcome.
In conclusion, the resumption of dollar sales to BDCs at a pegged rate of ₦1,450 per U.S dollar marks a significant step towards addressing the distortions in the foreign exchange market. With ongoing efforts to enhance market structure, promote fiscal discipline, and support the compliance of BDCs with regulatory requirements, stakeholders are optimistic about the future stability and growth of Nigeria's economy.
