In response to the continued depreciation of the Nigerian naira against the United States dollar, the Central Bank of Nigeria (CBN) has intensified its efforts to stabilize the currency by providing additional dollars to Bureau De Change (BDC) operators.
This move was announced in a new circular, referenced TEM/FEM/PUB/001/013, released by the CBN on Tuesday.
According to the circular signed by Dr. Hassan Mahmud, Director of the CBN’s Trade and Exchange Department, the apex bank has allocated $10,000 to BDCs at a rate of N1,021 per dollar. The CBN has also instructed the operators to sell the dollars at a spread not exceeding 1.5 percent above the CBN rate.
Despite these measures, the naira continued its downward trend, reaching a rate of N1,300 per dollar at the Nigerian Autonomous Foreign Exchange Market. This represents a 66 percent depreciation compared to the rate of N1,234 per dollar recorded on Monday.
During the day’s trading, the naira fluctuated, with the highest rate depreciating by N22, closing at N1,317 per dollar, while the lowest rate gained to N1,000 from N1,051 per dollar. The total daily turnover in foreign exchange increased slightly to $133.65 million, compared to $110.17 million on Monday.
In the parallel market, currency traders sold the dollar at rates ranging from N1,300 to N1,320 on Tuesday, compared to N1,260 recorded on Monday.
The CBN’s decision to sell more dollars to BDCs is part of its proactive strategy to manage currency volatility and ensure the availability of essential foreign exchange. This move follows a similar occurrence earlier this month and reflects the CBN’s commitment to defending the naira.
Currency fluctuations can have significant implications for trade and economic stability, making it crucial for the CBN to take measures to stabilize the exchange rate. The CBN has directed eligible BDCs to commence payment of naira deposits into designated CBN accounts starting April 22, 2024. The operators are also required to submit proof of payment and other necessary documents at the appropriate CBN branches for disbursement.
