Naira Now Exchanges At ₦1,245 As BDCs Await CBN To Adjust Rate

The Nigerian Naira experienced a notable appreciation, reaching ₦1,245 per dollar in the parallel market on Friday, surpassing the official and Bureau De Change (BDC) segments’ rates.

This development comes amid ongoing discussions between the Association of the Bureau De Change Operators of Nigeria (ABCON) and the Central Bank of Nigeria (CBN) regarding foreign exchange (FX) rate adjustments.

In the official FX market, the dollar was valued at ₦1,255.07 on Thursday, with the BDC segment quoting it at approximately ₦1,269/$1.

Contrary to online media reports suggesting a CBN rate adjustment for BDCs to ₦1,190 per dollar, ABCON’s national president, Aminu Gwadabe, clarified that no new changes have been implemented by the CBN.

The naira’s strength in the parallel market, often referred to as the black market, signifies a 1.20 percent increase compared to Thursday’s exchange rate of ₦1,260 per dollar.

This performance marks a significant recovery, with the naira appreciating by 46.58 percent since February 20, 2024, against the dollar in this market.

The local currency has also shown substantial gains in the official FX market, achieving its strongest position in three months at ₦1,255.07/$1.

Historical data from the FMDQ Securities Exchange indicates that the last time the naira fared better was on January 26, 2024, when it closed at N891.90 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

Compared to its lowest rate of ₦1,627.40 per dollar on March 8, 2024, at NAFEM, the naira has improved by 29.67 percent, highlighting a trend of gradual strengthening against the US dollar in both the official and parallel markets.

The CBN circular to the BDCs reads, “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.

“We write to inform you of the sale of $10,000 to each BDC at the rate of ₦1,251/$1. The BDCs are to sell to eligible end users at a spread of not more than 1.5 per cent above the purchase price.”

In February 2024, the CBN formalised dollar sale of $20,000 per BDCs. This followed the on-going reforms in the foreign exchange market, aimed at achieving an appropriate market determined exchange rate for the Naira.

In a circular issued by the CBN on February 27, 2024, signed by Hassan Mahmud, director of the trade and exchange department, the bank expressed concern over ongoing price distortions in the retail market, contributing to widening exchange rate discrepancies in the parallel market.

In response, the CBN announced the approval of foreign exchange sales to eligible Bureau De Change to address the demand for invisible transactions.

Each BDC is permitted to purchase $20,000 at a rate of ₦1,301/$ – representing the lower band rate of spot transactions executed at NAFEM on the preceding trading day (as of February 27, 2024).

All eligible BDCs were instructed to make Naira payments to designated CBN foreign currency deposit Naira accounts and provide payment confirmation along with necessary documentation for disbursement at specified CBN branches in Abuja, Awka, Lagos, and Kano.