The Central Bank of Nigeria (CBN) has extended the temporary access period in which Bureau De Change (BDC) operators can purchase FX from authorised dealers to May 30th, 2025. This was published in a circular released on February 4th, 2025.
“We refer to our circular TED/FEM/PUB/FPC/001/030 dated December 19 2024, which granted temporary access to existing BDCs to the NFEM for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD 25,000.00,” the circular read.
By the referenced circular, the initial deadline within which BDCs could access FX was until January 30th 2025. The reason was to meet the FX demand which is usually high during the end of year/holiday period. This most recent extension is granted to enable market participants meet the retail market demand for FX for eligible invisible transactions.
Per the conditions for allowing BDCs access FX provided in circular TED/FEM/PUB/FPC/001/030, and which continue to be in operation with this new extension, BDC operators are allowed to purchase FX from only one Authorised dealer of their choice.
Before such purchase is made, the BDC’s account must be fully funded and can only access the market at the prevailing NFEM rate.
All transactions relating to the sale of FX to BDCs by authorised dealers must be reported to the Trade and Exchange Department while BDCs are permitted to make a maximum price spread of 1% to retail end-users.
The CBN also assured the general public of the availability of PTA/BTA for their personal and business travel requirements through their banks. These transactions must be conducted at exchange rates determined by the market within the NFEM framework.
Why it matters
Invisible transactions (non-physical transactions), such as payment for services, international school fees, medical and maintenance allowances, etc., heavily affect the demand for FX in Nigeria.
In Q3 of 2024, the CBN recorded that a drop in the demand for FX for invisible transactions led to a total decline in the demand for FX in that quarter.
The big picture
This new extension can be seen as one of the CBN’s driveways to achieve a fully functional FX market, as it promised to continue to provide liquidity where necessary to manage price volatility.
Currently, Nigeria is grappling with high exchange rates and the Naira losing against major foreign currencies such as the US Dollar, UK Pounds, Canadian Dollar etc. As a way of strengthening the Naira, the CBN has rolled out different policies, including market-determined FX prices monitored by the NFEMS.
It has also prevented BDCs from accessing FX to sell to retail end-users, directing the end-users to purchase from the banks. BDCs can only access and sell FX because of the temporary access granted to them by the CBN.
By allowing BDCs access to FX and also selling to retail end-users, the CBN hopes to further regulate the price of FX by allowing more sellers in the market (BDCs) to meet the heightened demand for FX. This way, the FX price remains stable, and buyers have easy access to it at reasonable prices.
