By Chibuike Nwabuko
Abuja (Sundiata Post) – The reason why Naira is gaining is because the Central Bank of Nigeria (CBN) is selling at N1, 251/$1 and so no trader locks in large transactions above N1,251.
In essence, the Naira has floated but the CBN is intervening to strengthen the Naira by selling its Forex (FX) reserves to Bureau De Change operators at a price below the willing buyer/willing seller price.
The implementations are that the Naira will gain value but FX reserves are paying for it.
This is a band aid, the CBN is attempting to fix a problem it can’t fix without a huge war chest of FX reserves and the long-term fix is to produce and export.
Sundiata Post recalls that the CBN on Monday announced that it will begin the sale of dollars to Bureau De Change operators at the rate of N1,251/$1.
This was contained in a statement signed by the Director, Trade and Exchange Department, Dr. Hassan Mahmud and addressed to the President, Association of Bureau De Change Operators of Nigeria dated 25th March, 2024.
According to the apex bank, $10,000 FX will be sold to each eligible Bureau De Change (BDC) at $1/N1,251.
Also, all BDC operators are allowed to sell to end-users at a margin NOT MORE THAN 1.5% above the purchase rate from CBN.
In other words:
BDCs are to buy at N1,251
BDCs are to sell at N1,269
(1.5% increase).