Olamilekan Abayomi
The Central Bank of Nigeria (CBN) has approved a weekly foreign exchange sale of $150,000 to each licensed Bureau De Change (BDC) operator. This move aims to boost liquidity in the retail segment of the foreign exchange market and meet the legitimate needs of end users. According to the CBN, the policy is designed to deepen market efficiency and expand access to foreign exchange.
BDCs can now access foreign exchange from any authorised dealer bank at prevailing market rates, but must comply with existing operational guidelines. The CBN’s goal is to balance market access with strong regulatory oversight, ensuring liquidity in the foreign exchange market while safeguarding financial system integrity.
The weekly FX purchase limit is set at $150,000 per BDC. Authorised dealer banks must conduct full Know-Your-Customer (KYC) checks and due diligence checks on BDC clients. Transactions must be settled through designated settlement accounts with licensed financial institutions.
Cash settlement is limited to 25% of the transaction value. BDCs are required to sell any unutilised FX back to the market within 24 hours. This is expected to promote transparency and reduce speculation in the foreign exchange market.
The CBN’s policy is seen as a positive step towards stabilising the naira and attracting foreign investment. By providing BDCs with access to foreign exchange, the CBN aims to increase liquidity and reduce the gap between official and parallel market exchange rates.
BDCs play a crucial role in Nigeria’s foreign exchange market, serving as a vital link between banks and end-users. The CBN’s decision is expected to boost confidence in the market and promote economic growth.
The policy also underscores the CBN’s commitment to regulating the BDC sector and promoting financial inclusion. By providing BDCs with access to foreign exchange, the CBN aims to increase financial access and promote economic empowerment.
The Nigerian foreign exchange market has faced challenges in recent years, including volatility and scarcity of foreign exchange. The CBN’s latest move is seen as a step towards addressing these challenges and promoting stability in the market.
The impact of this policy on Nigeria’s economy will depend on various factors, including global market trends and investor confidence. However, the CBN’s decision is expected to promote transparency and stability in the foreign exchange market.
