• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Markets Currencies

See what happened to exchange rate the last time the CBN banned BDC

Analysts Nairametrics by Analysts Nairametrics
July 27, 2021
in Currencies, Financial Services, Spotlight
Naira falls across forex markets as businesses resume after public holidays
Share on FacebookShare on TwitterShare on Linkedin

The Central Bank Governor, Godwin Emefiele surprised journalists at the monetary policy committee briefing on Tuesday when he announced a ban of Bureau De Change Operators in the country. Since the ban was announced, we have received several inquiries from our readers who as expected, what to know what the implication of this could be on the exchange rate.

Apparently, this is not the first time the central bank is banning Bureau De Change operators in Nigeria. In January 2016, the Godwin Emefiele led central bank also banned the BDCs for similar acts, providing us with a useful guide to what might happen (see link).

Here is what happened as this Nairametrics article serves as a reminder.

  • On the 11th of January 2016, when the CBN banned BDCs, the exchange rate was N268/$1.
  • By 31st December 2016, the exchange rate had depreciated to N495/$1. See this Nairametrics article at the time for reference.
  • Devaluation was effectively 46% while the dollar had gained a whopping 85% against the naira.
  • Meaning if you held $100 in January 2016 when the CBN banned BDCs it was worth N26,800. But by December 31st 2016, that same dollar was worth N49,500.

What if the same was to reoccur?

  • On July 27th 2021, CBN banned BDCs when the exchange rate was N500/$1.
  • If it depreciates by 46% as it did in 2016 then we could be looking at a whopping exchange rate of N925/$1 by December 2021.
  • This will be unprecedented in the history of Nigeria and will surely increase the prices of goods and services across the country.
  • Interesting to note that the exchange rate has now depreciated by 16.3% from N360/$1 to N430/$1. Or the dollar has gained 19% against the naira.

Why did exchange rate fall so badly in 2016?

  • Firstly, after the ban of BDCs, dollar scarcity remained at the retail and wholesale end of the forex market.
  • This created both artificial and real scarcity for forex driving more people to the black market to get forex.
  • Those who were able to get forex from the official market simply just round tripped by going to the black market to sell their hoard.
  • This created a spiral effect that worsened the situation, depreciating the exchange rate to record proportions.
  • In fact, by early 2017 the exchange rate had hit N505/$1.

Fortunately, in 2017 the central bank introduced a costly policy of selling OMO bills to foreign and local institutional investors at very high interest rates, thus attracting dollars from overseas. These foreign portfolio investments helped crash the exchange rate positively from N505/$1 to about N363/$1. But we had gone from N165/$1 in 2014 to N363/$1 which is 54.5% devaluation.

RelatedStories

Naira , dollar, exchange rate

Exchange rate disparity returns as Naira appreciates to N1,545/$ officially, depreciates to N1,605/$ on parallel market 

June 21, 2025
Naira , dollar, exchange rate

Naira holds below N1,600/$ in the holidays

June 10, 2025

Bottom Line

Banning the BDCs for nefarious activities might be a move in the right direction however, if history is to serve as a guide, the CBN will need to ensure there is availability of forex at all markets especially the I&E window.

The reason for the challenge we have in the country still remains the lack of dollar supply in the economy. Foreign investors no longer import dollars into the country and oil revenue is still as bad as it was towards the end of last year.

This is probably the best time for the central bank to float the naira or adopt a more market driven approach that allows traders determine the exchange rate at which they want to buy and sell dollars. The CBN can continue to play its interventionist role by stepping in with supply when the price moves away from its guidance. Anything short of this could well lead Nigerian into a repeat of 2016.


Follow us for Breaking News and Market Intelligence.
Tags: Exchange Rate
Analysts Nairametrics

Analysts Nairametrics

Related Posts

Naira , dollar, exchange rate
Currencies

Exchange rate disparity returns as Naira appreciates to N1,545/$ officially, depreciates to N1,605/$ on parallel market 

June 21, 2025
Naira , dollar, exchange rate
Currencies

Naira holds below N1,600/$ in the holidays

June 10, 2025
Naira, Dollar
Currencies

Naira faces U.S dollar resurgence amid Nigeria’s oil production boost  

May 13, 2025
Agusto & Co sees gradual downward adjustment of official exchange rate to ₦480-500/$
Breaking News

Pressure mounts as Naira depreciates to N1,625 lowest points in 2025

May 9, 2025
Naira , dollar, exchange rate
Currencies

Naira weakens to N1,612/$1 at official market amid persistent FX supply concerns 

May 8, 2025
Currencies

Brent crude rally lifts some pressure off Naira

May 6, 2025
Next Post
Mutual funds

Focus on Funds: Stanbic Absolute Value Fund

Comments 7

  1. Chike Akalawu says:
    July 27, 2021 at 9:39 pm

    Like nairametrics rightly said. If cbn allow the naira to float and market forces determine the price while the Cbn push supply we will get it right.

    Reply
  2. Stanley says:
    July 27, 2021 at 11:48 pm

    Many thanks for this analysis. But I don’t see the CBN floating the naira as it should, for obvious reasons. Best stance would be to bet on further devaluation of the local currency, though I hope this doesn’t come to pass, for the sake of the already battered quality of life of an average Nigerian. Lastly, I believe the devaluation from #165 in 2014 to #363. to a dollar in 2016 was actually a whopping 120% devaluation and not 54%. That kind of huge devaluation occuring in peace time in a country summarises the extent of the mismanagement of the economy by the government.

    Reply
  3. Kelvinofficial says:
    July 28, 2021 at 8:19 am

    “Banning the BDCs for nefarious activities might be a move in the right direction however, if history is to serve as a guide, the CBN will need to ensure there is availability of forex at all markets especially the I&E window“

    Reply
  4. Ben Okutu says:
    July 28, 2021 at 8:41 am

    Thanks for this very insightful analysis. Please, could help us with the impact of resumption of sales of dollars to the BDCs after the 2016 ban was lifted.

    Reply
  5. One Guy says:
    July 28, 2021 at 11:51 am

    Please, they should find more ways to devalue naira … this country is already finished, was born and raised here but i’m a US citizen by heart and make all my cash in dollars.

    N1,500/$1

    Amen

    Reply
  6. Jennifer says:
    July 28, 2021 at 11:58 am

    Stanley ypu are so right

    Reply
  7. Jennifer says:
    July 28, 2021 at 11:59 am

    Stanley you are so right

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank
Zenth Bank








DUNS

Recent News

  • Ekiti State opens job applications for Agro-Allied International Cargo Airport operations 
  • Nigeria Immigration Service receives tech tools from Dutch Government to boost migration control 
  • Most expensive African countries to rent a home in 2025 

Follow us on social media:

Recent News

Ekiti State opens job applications for Agro-Allied International Cargo Airport operations 

Ekiti State opens job applications for Agro-Allied International Cargo Airport operations 

June 24, 2025
Nigeria Immigration Service receives tech tools from Dutch Government to boost migration control 

Nigeria Immigration Service receives tech tools from Dutch Government to boost migration control 

June 24, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics