CBN reopens FX window to BDCs to close official rate gap

…Banks to sell $150,000 weekly per BDC

Nigeria’s Central Bank has reopened access to the official foreign-exchange market for licensed bureaux de change (BDCs), a move aimed at improving dollar liquidity in the retail segment and curbing persistent pressure in the parallel market.

Under the new framework announced late Tuesday, each BDC will be permitted to purchase up to $150,000 per week at prevailing market rates, subject to strict compliance with existing operational guidelines. The policy marks a notable shift in the apex bank’s approach to managing foreign exchange distribution, after years of excluding BDCs from direct market access amid concerns about speculation and transparency.

The decision was conveyed in a circular signed by Musa Nakorji, director of the CBN’s trade and exchange department, and applies to all BDCs duly licensed by the regulator. The circular said the measure is designed to improve access to foreign currency for end users and deepen efficiency in the foreign exchange market.

“All BDCs duly licensed by the CBN are permitted to access foreign exchange through any authorised dealer bank of their choice, at the prevailing market rates,” the central bank said in the circular.

The inclusion of BDCs in NIFEM, which was launched in 2017 as part of broader reforms to unify exchange rates and restore confidence, is expected to channel more dollars into retail transactions such as travel allowances, school fees and medical payments. Analysts say the move could also help narrow the gap between official and parallel market rates if effectively implemented.

Authorised dealers are required to conduct full know-your-customer checks and due diligence on BDC clients before selling foreign exchange, reinforcing the regulator’s emphasis on transparency and anti-money laundering safeguards.

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To prevent hoarding and speculative activity, the central bank said BDCs are prohibited from holding open foreign exchange positions. Any foreign currency purchased but not utilised must be sold back to the market within 24 hours. In addition, all licensed BDCs are required to submit timely and accurate electronic returns in line with existing regulations.

Also, all transactions must be conducted through settlement accounts with licensed financial institutions, while third-party transactions are expressly prohibited. Cash settlement is capped at 25% of the value of each transaction, a restriction aimed at limiting the use of physical cash in the foreign exchange market.

The directive reflects CBN’s effort to widen access to foreign exchange while maintaining oversight, as the government looks to boost dollar reserves and curb inflation and currency volatility.

“The move aims to deepen market efficiency and ensure broader access to foreign exchange across the economy,” the circular said.

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The policy comes as the central bank, under Governor Olayemi Cardoso, pushes ahead with measures to attract foreign investment, and strengthen the naira.