Nigeria's central bank lifts dollar sales limit for bureau de change

Nigeria's central bank has lifted the restriction on the amount of dollars banks can sell to bureau de change in its bid to shore support for the local currency and narrow the gap between official foreign exchange rate and the parallel market.

Sanusi, CBN Gov

In a notice to banks dated Jan. 24, but released on Monday, the central bank said, bureau de change operators could now buy as much dollars from banks as long as they comply with its other rules of foreign exchange.
"The limit of $250,000 as the maximum weekly forex sales to a BDC -bureau de change- is hereby removed in order to shore up liquidity in that segment of the foreign exchange market," the central bank said in the circular.
Nigeria's central bank limited the amount of dollars that bureau de change firms can buy from banks to $250,000 a week in September in order to curb demand for the U.S. currency.
The local currency has hovered around 159-160 against the dollar so far this year but has traded nearer 170 at bureau de change (BDC) outlets, creating an opportunity for speculation.
However, the naira weakened to its lowest in more than four months on Monday and dealers said this was due to demand pressure from bureau de change operators after the central bank lifted the cap.
"There was expected some pressure on the naira today due to the latest  action by the central bank lifting the cap on amount of dollars banks could sell to a bureau de change per week, leading to the naira depreciating," one dealer said.
The local unit was trading at 163.10 to the dollar on the interbank market on Monday at 1204 GMT, weaker than the 160.50 it closed on Friday.