The Central Bank of Nigeria (CBN) has authorised deposit money banks (DMBs) to resume sales of foreign exchange to bureau de change operators (BDCs).
This step by the CBN may see the naira firm as much as 362 to a dollar at the parallel market, from about 395/$1, as at Tuesday, according to market insiders.
According to a circular signed by W. D. Gotring, director of CBN trade and exchange department, the bank said BDCs can get as much as $30,000 per week after such sales was suspended in earlier in 2016.
“Authorised Dealers shall sell foreign exchange cash to BDCs subject to a maximum of USD30, 000.00 (Thirty Thousand United States Dollars) to a BDC per week,” the circular read.
“A BDC shall nominate its preferred Authorised Dealer (DMB) and can only procure the said amount from only that bank of its choice in a week. Any breach of this condition will attract appropriate sanction.
“The selling rate by the Authorised Dealers to BDCs shall be the buying rate from IMTP plus a margin not exceeding 1.5%
“Foreign exchange cash purchased by BDCs from Authorised Dealers (Ads) shall be sold to foreign exchange end-users at a rate not exceeding two (2) percent margin above the buying rate.”
Going by the circular, dollars will get to the end users, at 3.5 percent higher than the interbank rate (1.5 percent for dealers and two percent for BDCs).
The lowest the interbank rate has gone in 2016 is 350/$1 on Tuesday. Adding a 3.5 percent premium (N12.25), end users are expected to get the dollar at N362.25 (interbank rate of 350 and the margin of N12.25).
When the interbank rate is at 310, as claimed by the CBN, a 3.5 percent premium would see BDCs sell at N320.85 to the dollar.
The downside is that the CBN restricts this sale of forex to only three items, which obviously exclude the prohibited 41 items.
“Funds purchased by BDCs shall be disbursed for the following eligible transactions only. In all cases, maximum disbursement per transaction shall not exceed USD5,000.00.
The items are: “Business Travel Allowance / Personal Travel Allowance, Overseas School Fees, and Overseas Medical Fees”.