The Association of Bureau de Change Operators of Nigeria (ABCON) has reacted to the news of the Central Bank of Nigeria (CBN) extending the Foreign Exchange (FX) sale period to May 30.
ABCON President, Dr. Aminu Gwadabe, said the move demonstrates the CBN’s commitment to stabilizing the FX market.
According to him, it also promotes inclusiveness through the Electronic Foreign Exchange Matching System (EFEMS).
Nairametrics reported that the CBN announced the extension in a circular signed by Dr. W. J. Kanya, Acting Director of the Trade and Exchange Department.
The circular, titled “Sales of Foreign Exchange to BDCs to Meet Retail Market Demand for Eligible Invisible Transactions,” extends the previous deadline of January 31 to May 30. It grants temporary access to BDCs to purchase FX from Authorized Dealers, subject to a weekly cap of $25,000.
Compliance by deposit money banks
Dr. Gwadabe, however, expressed concern that banks failed to comply with the initial notice from the apex bank in December 2024, which instructed them to sell FX to BDCs. He urged deposit money banks to support the CBN and comply with the directive.
“ABCON and its members indeed received the news as a good development. We considered it as part of the CBN’s efforts at ensuring continuity and its determination for the inclusiveness of our sub-sector in the EFEM Market,” he told NAN.
“We, however, call on all money deposit banks to partner with CBN and our members in the implementation of this circular, to ensure liquidity in the retail end sector and the Naira’s ongoing stability. On behalf of my members, I extend my sincere gratitude to the CBN management for their flexibility and transformative leadership. I assure them that we will continue to serve as a vital third-leg mechanism, committed to eliminating volatility and narrowing the gap between the parallel market and the EFEM market.”
What you should know
The CBN has undertaken a series of reforms in the FX market, including restricting BDCs from sourcing FX directly from official channels in past years.
- However, due to market volatility and the need to address the widening gap between official and parallel exchange rates, the central bank reintroduced controlled sales of FX to BDCs in December 2024.
- The move aimed at addressing liquidity shortages and discouraging hoarding or speculative activities in the market.
For BDC operators, this extension offers continued access to FX supply, allowing them to operate within regulated guidelines. The decision provides a level of stability and predictability for businesses and individuals who rely on BDCs for foreign exchange transactions.
However, with macroeconomic factors such as inflation, external reserves, and foreign investment inflows still influencing the FX market, it remains to be seen how effective this measure will be in sustaining currency stability.
