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CBN Offloads Forex to BDCs at N1,251/$1 Amid Naira’s Recovery The naira had plummeted to record lows over recent months, dropping from approximately N700/$1 last May to around N2,000/$1 in January, before showing signs of appreciation in March.

 

A man exchanges Nigeria’s currency, the Naira, for US dollars in Lagos, Nigeria. (Photo by PIUS UTOMI EKPEI – AFP)

Amidst months of unprecedented uncertainties, the Naira gradually appreciates against the dollar, prompting the Central Bank of Nigeria (CBN) to announce the sale of $10,000 to each eligible Bureau De Change (BDC) operator in the country at the rate of N1,251/$1. The CBN directed BDCs to sell to eligible end-users with a spread of not more than 1.5% above the purchase price, cautioning that any breach would result in appropriate sanctions, including outright suspension from further participation in the sale.

Nigeria contends with various economic challenges, including rising inflation, food inflation, forex crises, economic hardship, and high living costs triggered by the removal of petrol subsidies. This situation has led to protests in parts of the country as the purchasing power of the Naira and disposable income of common Nigerians shrink in the face of forex crises and inflation.

Over the past nine months, the Nigerian Naira has experienced significant fluctuations since the administration of President Bola Tinubu collapsed the foreign exchange window. Prices of commodities soared, reaching double their original value as the Naira hit an all-time low, falling from about N700/$1 last May to approximately N2,000/$1 last month before gradually appreciating in March.

To stabilize the value of the Naira, the CBN revoked the licenses of 4,173 BDCs over compliance failures on March 1, 2024. In February, the bank increased the minimum capital requirements for BDC operators in Nigeria to N2 billion for Tier 1 license holders and N500 million for Tier 2 license holders.

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Under the leadership of new bank chief Olayemi Cardoso, who assumed office last September, the CBN is expected to announce new fiscal and monetary policies during the apex bank’s 294th meeting of the Monetary Policy Committee on Tuesday, March 26, 2024. The MPC previously raised the country’s interest rate from 18.75% to 22.75% in February to combat galloping inflation, which stood at 31.7% as of February.

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