CBN Sells Dollars to BDCs to Stabilize Naira.

The Central Bank of Nigeria (CBN) has initiated a strategy to bolster the naira by selling dollars to Bureau De Change (BDC) operators at a rate of N1,580 per dollar. This move, announced around September 6-7, 2024, involves the sale of $20,000 to each eligible BDC. The aim is to inject more liquidity into the market and address the demand for invisible transactions, which could help stabilize the naira’s value.

• Exchange Rate and Margin: BDCs are allowed to sell these dollars to eligible end-users at a margin not exceeding 1% above the CBN’s selling rate of N1,580 per dollar.
• Market Response: Following this intervention, there’s been some positive movement in the naira’s value. On the official market, the naira has shown signs of stabilization, trading below N1,600/$1 after a period of decline. However, in the parallel market, while there’s been a slight appreciation, the naira still faces challenges, indicating ongoing volatility.
• Public Sentiment and Economic Context: Posts on X (formerly Twitter) reflect a mix of hope and skepticism about the effectiveness of this strategy in the long term, given the persistent pressure on the naira. The CBN’s action is seen as part of broader efforts to manage foreign exchange liquidity and stabilize the currency amidst economic fluctuations.

This intervention by the CBN is part of a broader strategy to manage forex liquidity, combat the naira’s depreciation, and ensure there’s enough forex for essential transactions, reflecting ongoing efforts to stabilize Nigeria’s currency in a volatile economic environment.