The Central Bank of Nigeria (CBN) has announced that Bureaux De Change (BDCs) will have temporary access to the Nigerian Foreign Exchange Market (NFEM) between December 19, 2024, and January 30, 2025.
The BDCs will be allowed to trade up to $25,000 weekly, with transactions requiring upfront funding at prevailing rates and adhering to a maximum spread of 1 percent.
The CBN reiterated its commitment to ensuring that all legitimate foreign exchange transactions occur within the NFEM at market-determined rates. It also assured Nigerians that Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) remain accessible at commercial banks for travel-related needs.
The policy move has sparked diverse reactions. On social media platform X, a former banker with the handle name Mosebolatan expressed cautious optimism, writing, “With the BDCs participation, the Naira may appreciate slightly because of inflows from IJGBs, but then what happens after January 30?” Another user predicted immediate gains for the Naira, stating, “Naira could gain strength by Monday.”
Aminu Gwadabe, president of the Association of Bureaux De Change of Nigeria (ABCON), shared his perspective in an interview with BusinessDay. Gwadabe emphasised that the trajectory of the Naira’s appreciation hinges on the CBN’s intervention in the foreign exchange market. “We have observed a lot of volatility as the intervention of the CBN is limited to the wholesale window, which is massive and in sharp contrast with no intervention in the retail exchange segment, which is the anchor rate presently for all transactions,” he said.
Gwadabe stressed the importance of injecting liquidity into the retail exchange market through BDCs to stabilise the Naira. “For the trajectory of Naira appreciation to continue, the CBN must definitely put liquidity into the retail exchange market through the BDCs,” he added.
He further advised the CBN to address the volatility in the market to achieve the projected exchange rate of N1,400 to the dollar as outlined in the national budget. “The advice to CBN now is to stem the volatility to achieve N1,400 per dollar in the budget through BDCs windows, either by direct CBN intervention or through the banks’ sales of autonomous transactions to BDCs,” Gwadabe explained.
Gwadabe concluded by highlighting the critical role BDCs play in exchange rate management. “The BDCs have remained the most effective and potent monetary tools of CBN’s exchange rate management and transmission mechanism of CBN’s control of volatility,” he stated.
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