Emmanuel OchayiThe Central Bank of Nigeria (CBN) has announced a temporary initiative allowing Bureau de Change (BDC) operators to purchase up to $25,000 weekly from the Nigerian Foreign Exchange Market (NFEM).
This measure, effective from December 19, 2024, to January 30, 2025, aims to address increased demand for foreign exchange during the holiday season.
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In a circular dated December 19, 2024, signed by T.G. Allu on behalf of the CBN’s acting Director of the Trade and Exchange Department, the bank outlined the guidelines for this initiative. BDC operators are permitted to buy forex from a single authorised dealer of their choice, provided they fully fund their accounts beforehand.
The transactions will be conducted at the prevailing NFEM rate, with a maximum pricing spread of 1% allowed for end-users. The CBN emphasised that all forex transactions under this scheme must be reported to the Trade and Exchange Department.
The circular stated: “To meet expected seasonal demand for foreign exchange, the CBN is allowing temporary access for all existing BDCs to the NFEM for the purchase of FX from authorised dealers, subject to a weekly cap of $25,000. This window will be open between December 19, 2024, and January 30, 2025.”
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Ensuring Liquidity and Compliance
The CBN reassured the public that personal and business travel allowances remain accessible through banks for legitimate needs. These transactions are expected to be conducted at market-determined exchange rates within the NFEM framework.
The apex bank reiterated its commitment to maintaining a functional and liquid forex market, minimizing price volatility, and ensuring orderly conduct among forex operators.
Market Implications
Financial experts suggest that this initiative could provide temporary relief to forex users, especially during the holiday period when demand typically rises. However, they warn that the limited weekly cap of $25,000 may not fully address broader forex supply challenges in the market.
CBN’s strategy reflects a balancing act between meeting seasonal demand and maintaining market stability. Market analysts will closely monitor the impact of this policy on exchange rates and liquidity within the NFEM during this period.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
