Nigeria’s central bank has taken steps to support the country’s currency, the naira, by offering to sell dollars to Bureaux de Change (BDC) operators at a rate of 1,101 naira per dollar. This move is part of ongoing efforts to stabilize the local currency amidst economic challenges.
This rate marks the highest level at which the central bank has sold the US dollar to BDCs since February, when it was offered at 1,301 naira per dollar. It represents a 12% increase from the recent official market closing rate of 1,251 naira per dollar, signaling the central bank’s commitment to managing the currency’s value.
The naira has faced significant fluctuations in recent months, with a 63% decrease in value against the dollar since President Bola Tinubu eased foreign exchange controls in June. However, recent measures by the central bank, including monetary policy tightening and clearing overdue dollar purchase agreements, have contributed to a rebound in the currency’s strength.
In response to aggressive monetary policy tightening, including interest rate hikes of 600 basis points to 24.75% since the beginning of the year, the naira has bounced back more than 20% from its recent low of 1,627 naira per dollar on March 8. Additionally, the clearance of a backlog of overdue dollar purchase agreements, estimated at $7 billion, has injected liquidity into the local dollar market.
The central bank’s offer to BDCs suggests its intention to guide the naira to stronger levels against the dollar or indicates confidence in the currency’s ongoing rally. The naira’s recent performance has made it one of the best-performing currencies tracked by Bloomberg in the past month.
Bureaux de Change in Nigeria play a crucial role in facilitating currency exchange for individuals and businesses. They are permitted to sell foreign currency to customers at a spread of not more than 1.5% above the purchase price, providing access to foreign exchange for various transactions.
In summary, Nigeria’s central bank’s recent move to sell dollars to Bureaux de Change operators at an elevated rate reflects its continued efforts to stabilize the naira amidst economic challenges. These measures, coupled with monetary policy adjustments and liquidity injections, aim to bolster the currency’s value and support economic stability in the country.
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