CBN Extends FX Sales To May 30 To Strengthen Market Stability – BDC Operators

The Central Bank of Nigeria (CBN) extends the Foreign Exchange (FX) sales period for Bureau de Change (BDC) operators to May 30, a move the Association of Bureau de Change Operators of Nigeria (ABCON) describes as a commitment to market stability and inclusivity.

ABCON President, Dr. Aminu Gwadabe, welcomes the extension, stating that it reinforces the CBN’s effort to stabilize the FX market while promoting inclusiveness through the Electronic Foreign Exchange Matching System (EFEMS).

The extension, detailed in a circular signed by Dr. W. J. Kanya, Acting Director of the Trade and Exchange Department, moves the initial deadline from January 31 to May 30. Under this directive, BDCs can continue purchasing FX from authorized dealers, subject to a weekly limit of $25,000.

Despite the CBN’s directive, Dr. Gwadabe expresses concerns over the failure of deposit money banks to comply with the initial instruction issued in December 2024, which mandates them to sell FX to BDCs. He urges banks to align with the CBN’s policy to ensure market liquidity and support exchange rate stability.

“ABCON and its members view this development as a positive step. It underscores the CBN’s commitment to continuity and inclusiveness in the FX market,” he states.

“We urge all deposit money banks to collaborate with the CBN and BDC operators in implementing this directive to enhance liquidity at the retail level and support the naira’s stability. On behalf of our members, I appreciate the CBN’s leadership and flexibility in addressing FX challenges. We remain committed to reducing volatility and narrowing the gap between the parallel and official exchange rates.”

The CBN implements several FX market reforms in recent years, including restrictions on BDCs from sourcing FX directly from official channels. However, due to persistent market volatility and widening disparities between official and parallel exchange rates, the central bank reinstates controlled FX sales to BDCs in December 2024.

This measure aims to address liquidity challenges and discourage speculative activities in the FX market. The extension provides BDC operators with continued access to FX within regulated limits, offering a degree of stability for businesses and individuals relying on them for foreign exchange transactions.

However, macroeconomic factors such as inflation, external reserves, and foreign investment inflows continue to influence the FX market. The long-term effectiveness of this policy in sustaining currency stability remains to be seen.