The Central Bank of Nigeria announced the resumption of dollar sales to bureaux de change yesterday, reversing the sharp depreciation of the Naira to N1,640 per dollar in the parallel market.

The dollar sales to BDCs are resuming after a two-month pause since the last sale in April.

In a circular signed by the Acting Director of the Trade and Exchange Department of the CBN, A. A Mahdi, the bank stated it would sell $20,000 to each BDC.

The CBN directed that BDCs should sell to end-users at a margin of not more than N1,450 per dollar, which means BDCs will sell to end-users at N1,475.75 per dollar.

The CBN said, “Following the ongoing reforms in the foreign exchange market, with the objective of achieving an appropriate market-determined exchange rate for the Naira, the Central Bank of Nigeria (CBN) has observed the continued distortions in the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.”

“To this end, the CBN has approved the sales of FX to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,450/$ (representing the lower band of the trading rate at Nigeria Foreign Exchange Market, NAFEM in the previous trading day).”

“All BDCs are allowed to sell to eligible end-users at a margin NOT MORE THAN one point five percent (1.5%) above the purchase rate from CBN.”

“All eligible BDCs are directed to make the Naira payment to the listed CBN Naira Deposit Account Numbers and submit confirmation of payment with other necessary documentation for disbursement at the appropriate CBN Branches — (ABUJA, AWKA, KANO and LAGOS).”

Following the announcement, the Naira, which had depreciated sharply to N1,640 per dollar in the parallel market yesterday morning, appreciated rapidly to N1,572 per dollar by the close of business.

However, this represents a N2 depreciation compared to the closing rate of N1,570 per dollar in the parallel market on Wednesday.