The Digest:
The Central Bank of Nigeria (CBN) has directed authorised dealer banks to sell foreign exchange to licensed Bureau De Change (BDC) operators from the Nigerian Foreign Exchange Market (NFEM). According to a circular signed by Director Musa Narkoji, each BDC can access a maximum of $150,000 weekly at prevailing market rates to improve liquidity in the retail segment. The CBN stated the move aims to meet legitimate end-user needs. Banks must complete necessary due diligence, and BDCs are prohibited from holding unutilised funds, required to sell balances back within 24 hours. All transactions must be settled through licensed financial institution accounts, with cash settlements not exceeding 25% per transaction.
Key Points:
- This policy is intended to increase the availability of forex for personal and business travel, medical fees, and school payments.
- By directing forex through formal channels, it aims to stabilise the retail exchange rate and reduce the parallel market premium.
- Licensed BDCs gain regulated access, while banks act as intermediaries, strengthening the formal forex distribution system.
- The directive represents a structured approach to managing retail forex liquidity within the official market framework.
- Reintroducing BDC access at this scale indicates confidence in improved market stability and a shift in forex management strategy.
The effectiveness of this measure will be seen in its impact on exchange rate stability and the availability of forex for retail users.
Sources: CBN Circular, TheCable
