As the Central Bank of Nigeria (CBN) continues with its frequent injections of dollars into the foreign exchange market, the number of Bureaux De Change (BDCs) approved by the apex bank rose to 3,389 as at August 8th, 2017, according to data released by the regulator yesterday.
This shows that since April 24 this year when the CBN last released the updated list of BDCs, it has approved an additional 150 BDC operators to transact foreign exchange in the country. The number of CBN-approved BDCs has been steadily increasing from 1,400 over two years ago to the current 3,389. Analysts point out that the rising number of BDCs in the country will put more pressure on the nation’s foreign reserves as the total amount of dollars that the CBN sells to BDCs will significantly increase. Currently, according to the banking watchdog’’s forex policy, each BDC is entitled to $40,000 weekly.
Despite concerns in some quarters over the pressure that this will put on the nation’s foreign reserves, the apex bank has defended its decision to continue to approve BDCs that are ready to comply with regulations, contending that this was necessary in order to increase liquidity in the foreign exchange market as well as ensure naira stability.
Indeed, the CBN’s stoppage of dollar sales to BDCs in January 2016 led to the naira sharply declining from N265/$1 to N283/$1 on the parallel market at the time. With the CBN frequently injecting dollars into the forex market, the naira has stabilised against the dollar in recent months. Yesterday, the local currency appreciated against the greenback on the parallel market, exchanging at N363 to the dollar from the N364 it exchanged last Tuesday.