The Bureau De Change (BDC) operators have attributed the recent strong performance of the naira to the implementation of the Central Bank of Nigeria (CBN) policy which allows authorized dealers to sell foreign exchange directly to these licensed currency traders.
The BDC operators revealed that there is a lot of forex inflow coming into the interbank window with growing investors’ confidence and huge portfolio investments coming into the banks.
The apex bank had in December 2024, introduced a revised guideline that permits licensed BDC operators to purchase foreign exchange directly from Authorized Dealers as part of its move aimed at streamlining Nigeria’s forex market enabling the naira to reflect its true value.
However, the BDCs highlighted the significant challenges they faced with complaints about the reluctance of the banks to follow through with its implementation and then appealed for its extension by the CBN. It said that the attitude of the banks affected the takeoff of the policy which was expected to end on January 31, 2025.
In response to the pleas of the BDC operators, the CBN extended the deadline for the weekly forex purchases to May 30, 2025.
President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, who acknowledged that the FX market is improving, stated that many of the banks have started the implementation of direct forex sales to the licensed BDCs which has impacted significantly the forex market.
When asked why the naira has been showing strong resistance recently, Gwadebe said, ‘’On Thursday it came to about N1,555/$1, it was over N1,560/$1, and on Friday it came to N1,545, N1,540/$1. One, this CBN circular, a lot of many banks have started the implementation of the CBN circular in terms of interbank proceeds, so that has a significant impact.’’
Throwing more light on the circular, the ABCON boss said, ‘’The BDCs have sources, one of the sources is the CBN intervention, then you also have the interbank, like was done during Sanusi time. So, any time the CBN is withdrawing its own direct intervention, they normally direct banks out of their own inflows, is it direct remittances, export proceeds, you know they are the custodian of those funds, so the CBN normally gives them a kind of prudential target out of those inflows so they can distribute or sell to the BDCs according to the market rate.
‘’So that is the purpose of that circular because one time the CBN suspended that window for banks to be selling to the BDCs, we requested for the revisiting of that window which the CBN granted in late December 2024 and reactivated it in this February.
‘’This is the reason BDCs can now buy from the interbank window and you know there are a lot of inflows coming into the interbank window, there is increasing investors’ confidence. So I’m sure the banks are awash with portfolio investments coming in, which is giving them the muscles to at least have a kind of where to offload their surpluses.’’
Speaking to another BDC operator, Mallam Adamu, on what could be responsible for the recent appreciation of the Naira in the last few days, he said,
‘’I think the FX can sometimes be like that. It goes up and comes down. In the morning it was around 1570 and fell to about 1560 later on Friday. That’s how the market works. On whether it can be linked to the recent CBN policies, Adamu said, ‘’Well, that can be but I’m not so sure. We observed that many people are selling recently as they are buying. I don’t know if this has to do with specific policies of CBN.
This restriction is aimed at preventing speculative activity and ensuring better oversight. Any BDC found violating this rule will face appropriate sanctions from the CBN.
