Naira Gains N70 Against Dollar as CBN Opens FX Tap for BDC Operators
The Nigerian naira has recorded a significant appreciation against the United States dollar in the parallel market, rising by approximately N70. This improvement follows a pivotal decision by the Central Bank of Nigeria to permit Bureau De Change operators to access foreign exchange from the official market.
CBN Policy Boosts Retail FX Liquidity
In a circular issued on Tuesday, February 12, the CBN directed that BDCs can now access up to $150,000 weekly through authorised dealer banks. These banks will execute purchases from the official market on behalf of the BDCs, effectively reintegrating them into the formal foreign exchange supply chain.
Dr Musa Nakorji, the CBN Director of the Trade and Exchange Department, who signed the circular, stated that this move aims to enhance foreign exchange liquidity in the retail segment and meet the legitimate needs of end users.
Market Reaction and Expert Analysis
Following the announcement, the naira strengthened to between N1,425 and N1,430 per dollar in the parallel market on Thursday, February 12. This marks a notable recovery from rates as high as N1,500 per dollar observed in recent weeks.
Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria, hailed the policy shift as a major boost for the retail foreign exchange segment. He noted that early signs indicate increased stability and improved liquidity conditions.
"This is very good news for us. Even before full implementation, we have already seen positive improvements in the exchange rate dynamics. The gap between the official and the parallel market used to be as wide as N84 to a dollar, but we have seen that margin reduce significantly to around N30 or N40. That level of convergence gives confidence that the market is moving toward stability," Gwadebe explained.
He added that as of the time he left his office, the open market rate was around N1,425 to N1,430 to the dollar, with a downward trend observed due to improving liquidity and returning confidence.
Broader Economic Implications
Economist Ayo Teriba commented that this development is part of broader monetary and external sector reforms that are already yielding macroeconomic gains, particularly in reserve accretion and exchange rate stability.
"With reserves at $30 billion, Nigerians should be confident that exchange rate stability is here to stay," Teriba stated.
CardinalStone's daily market update showed the naira rose 0.70% to close at N1,435 per dollar, further underscoring the positive impact of the CBN's policy.
Regulatory Compliance and Licensing
The CBN has also mandated that all licensed BDCs submit accurate electronic reports on time, in accordance with existing regulations. Additionally, the apex bank has released a full list of 82 Bureaux De Change approved under its revised regulatory framework.
The CBN urges Nigerians to transact only with authorised forex dealers, emphasizing that only operators listed on its official website are recognised to conduct BDC business in Nigeria.
This policy shift is expected to continue narrowing the gap between official and parallel market rates, fostering greater stability in Nigeria's foreign exchange market.
