The Central Bank of Nigeria (CBN) has extended the deadline for Bureau de Change (BDC) operators to access the Nigerian Foreign Exchange Market (NFEM) for weekly foreign exchange (FX) purchases.
This extension, announced in a circular signed by the Acting Director of the Trade & Exchange Department at the CBN W.J. Kanya, pushes the previous deadline of January 31, 2025, to May 30, 2025.
The circular referenced a directive (TED/FEM/PUB/FPC/001/030) issued on December 19, 2024, which temporarily granted BDCs the ability to purchase FX from Authorized Dealers with a weekly cap of $25,000. In the statement, the CBN confirmed that the terms and conditions outlined in the December circular would remain unchanged despite the extension.
This move is expected to have a positive impact on BDC operators by ensuring continued access to foreign exchange, which could help stabilize the parallel market and improve liquidity. It also underscores the CBN’s ongoing intervention in managing forex supply and its commitment to maintaining regulatory oversight in the market.
The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, had earlier expressed concerns about the implementation challenges of the policy, noting that the banks had been hesitant in fully enforcing the CBN’s directives. Gwadebe had advocated for an extension to improve efficiency and stabilize the forex market, particularly at the retail level where volatility is more pronounced.
Experts suggest that maintaining the $25,000 cap ensures controlled FX distribution, helping to curb speculative activities in the market. However, questions remain about the long-term availability of forex, especially amid ongoing economic pressures and fluctuations in Nigeria’s FX reserves.
Background of the Policy:
The CBN had previously restricted BDCs from sourcing FX directly from official channels in prior years. However, following market instability and the widening gap between official and parallel exchange rates, the CBN reintroduced controlled FX sales to BDCs in December 2024 to address liquidity shortages and discourage hoarding and speculative behavior.
Implications for BDC Operators:
For BDC operators, the extension provides ongoing access to FX, offering stability within the regulated framework. This move is expected to benefit businesses and individuals who rely on BDCs for foreign exchange transactions. Despite this, the effectiveness of the measure in sustaining currency stability will depend on macroeconomic factors such as inflation, foreign reserves, and foreign investment inflows.
