THE Central Bank of Nigeria (CBN) has directed Bureau de Change (BDCs) operators to purchase up to $25,000 weekly from a single authorised dealer bank (ADBs) to prevent speculative activity and ensure better oversight of the retail end of the market.
The directive is contained in a circular dated February 5 and signed by its acting director of the Trade and Exchange Department, W. J. Kanya.
It said the new guidelines aimed at ensuring transparency and curbing potential forex misuse. It vowed to sanction violators of the rule appropriately.
“Any authorised dealer and BDC that diverts funds or violates the provision of these guidelines shall attract appropriate sanction, including suspension of its dealership licences,” CBN warned.
The apex bank also directed authorised dealers to sell FX to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window to ensure consistency in pricing.
The CBN imposed a one per cent cap on the margin at which the BDCs could charge end-users above their purchase price.
It explained that the one per cent margin applied to all forex sold by BDCs, irrespective of its source.
To enhance market transparency, the CBN has made reporting requirements mandatory for both authorised dealer banks and BDCs.
“Authorised dealers must submit weekly reports of their forex sales to BDCs in a specified Excel format to the CBN Trade and Exchange Department via teddmo@cbn.gov.ng.
“BDCs must render daily returns on forex purchases and sales (utilisation) through the Financial Institutions Forex Reporting System (FIFX). These measures will help the CBN track forex flows and prevent illicit activities in the currency market,” the CBN stated.
The apex bank also specified that BDCs could only disburse purchased FX for specific transactions, with a maximum of $5,000 per transaction quarterly.
The transaction includes business travel allowance (BTA), personal travel allowance (PTA), overseas school fees, and overseas medical fees.
The ICIR reports that CBN had, in an earlier circular on Monday, February 3, extended the temporary access it granted to BDC operators to purchase $25,000 weekly from the Nigerian Foreign Exchange Market till May 30.
The apex bank had set the expiring date to January 31 but said the extension would allow the BDCs to continue purchasing forex from authorised dealers under existing conditions.
The ICIR also reports that the continued shoving of FX at the retail end of the market could impact the country’s external reserves.
A cursory look at the reserves management chart of the apex bank showed that Nigeria’s external reserves declined significantly by $1.16 billion in January 2025.
It depleted the gross reserves by $592.58 million from the margin it was at the end of December 2024.
It showed that reserves fell from $40.88 billion at the end of December to $39.72 billion as of January 31.