The naira, Nigeria‘s currency, ended the month weaker, despite a surge in dollar supply amounting to $4.60 billion in the official foreign exchange (FX) market.
The FX market closed for the month on Friday with the naira losing 5.60 percent as the dollar was quoted at N1,485.99, weaker than N1,402.67 quoted at the beginning of the month, according to data from the FMDQ Securities Exchange Limited.
Read also: Dollar crashes to N1,173 at official market as CBN intervenes
On a day-on-day trading basis, the local currency closed flat at 0.08 percent as the dollar exchanged at N1,485.99 on Friday as against N1,484.75 quoted on Thursday at NAFEM.
Dollar supplied by willing buyers and willing sellers was as high as $4.60 billion in the month under review.
The daily market summary released by the FMDQ showed that the intraday high closed the month at N1,550 per dollar, weaker than N1,445 at the beginning of the month. The intraday low closed stronger at N1,174.88/$1 compared to N1,299.42 per dollar quoted at the beginning of the month.
The naira has depreciated against the dollar, losing 6.12 percent of its value in one month on the parallel market, also known as black market.
Read also: Higher-for-longer: The consequence of continuous CBN rate hikes
The foreign exchange market closed for the month of May 2024, with the dollar selling for N1,470, weaker than N1,380 quoted at the beginning of the month.
On a day-on-day basis, the local currency appreciated by 0.68 percent as the dollar was quoted at N1,470 on Friday from N1,480 quoted on Thursday on the black market.
The Central Bank of Nigeria (CBN) whithin the month introduced new regulatory guidelines to oversee the activities of Bureau de Change (BDC) operators. These guidelines, outlined in a circular released recently, established new minimum capital requirements and operational restrictions for BDCs, effective from June 3, 2024.
Under the new regulations, Tier-1 BDCs must maintain a minimum capital base of N2 billion, while Tier-2 BDCs require N500 million. The mandatory caution deposit of N200 million for Tier-1 license holders and N50 million for Tier-2 license holders has been eliminated.
In a statement, Haruna Mustafa, CBN’s director of financial policy and regulation, emphasised that existing BDC operators are required to reapply for new licenses and meet the revised capital requirements within six months of the effective date.
The CBN has imposed several prohibitions on BDC activities, including street trading, international outward transfers, financing of political activities, and dealings in gold, precious metals, crypto assets, and other virtual assets. Additionally, BDC transactions exceeding USD 500 must be conducted through digital channels.
The circular explained that these changes are part of broader reforms aimed at repositioning the BDC sub-sector to better serve Nigeria’s foreign exchange market. The CBN had initially released draft guidelines in February 2024 for stakeholder input and has now finalized the regulatory framework following extensive consultations.
“Following the conclusion of stakeholder consultations and in the exercise of the powers conferred on it by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020, the CBN hereby issues the attached Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria 2024 for compliance by all operators and promoters of proposed BDCs in Nigeria,” the circular stated.
These comprehensive guidelines are expected to streamline BDC operations and enhance regulatory oversight in Nigeria’s financial sector.
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