In a move aimed at stabilizing the Nigerian naira and ensuring liquidity in the foreign exchange market, the Central Bank of Nigeria (CBN) has announced an extension of its foreign exchange (FX) sales to Bureau de Change (BDC) operators. The new directive extends the previously set deadline from January 31, 2025, to May 30, 2025, providing BDCs with continued access to foreign currency from authorized dealers.
According to a circular issued by Dr. W. J. Kanya, the Acting Director of the CBN’s Trade and Exchange Department, the extension is part of the bank’s commitment to maintaining a fully functional foreign exchange market. This policy will allow BDCs to purchase up to $25,000 weekly from authorized dealers, similar to the terms outlined in the initial December 19, 2024, circular.
The CBN’s decision comes at a time when Nigeria’s foreign exchange reserves have seen a significant drop, decreasing by $1.11 billion in January 2025 alone, from $40.88 billion to $39.77 billion. This reduction is attributed to various factors including external debt servicing, capital outflows, and CBN’s interventions in the forex market to stabilize the naira, which has appreciated significantly within the same period.
The extension of FX sales to BDCs is seen as a strategic move to enhance market liquidity at the retail level, ensuring that small-scale importers, travelers, and individuals needing foreign currency for personal transactions have access to dollars. The policy is also expected to help manage price volatility by providing a steady supply of foreign exchange.
BDCs are now required to adhere strictly to the Know Your Customer (KYC) measures and report their transactions daily through the Financial Institutions Forex Reporting System (FIFX). They can only purchase foreign exchange from a single authorized dealer each week to prevent market manipulation and ensure transparency.
The Association of Bureau de Change Operators of Nigeria (ABCON) has welcomed this development, viewing it as a positive step towards inclusivity in the foreign exchange market. However, there are concerns regarding the compliance of banks with previous directives, as some have failed to supply BDCs adequately in the past.
This initiative by the CBN is part of broader reforms aimed at enhancing the efficiency and transparency of Nigeria’s foreign exchange market. It follows other significant changes like the shift to a “Willing Buyer, Willing Seller” model for FX pricing and the removal of restrictions on interbank FX transactions, which are all designed to reduce the gap between official and parallel market rates and curb speculative activities.
As Nigeria navigates through economic challenges, including inflation and currency stability, these measures by the CBN could be pivotal in fostering a more predictable and accessible FX environment for all market participants. However, the effectiveness of these policies will largely depend on their implementation and the response of market players to the new regulatory landscape.
