KEY POINTS

• CBN allows Bureaux de Change $25,000 weekly forex access to stabilize the Naira and reduce speculative trading.
• EFEMS enhances transparency in forex trading, curbing illicit exchange and boosting Naira’s value by over N250 against the dollar.
• Updated guidelines mandate a $100,000 minimum trade size, promoting efficiency and transparency in Nigeria’s interbank forex market.

The Central Bank of Nigeria (CBN) has provided Bureaux de Change (BDC) operators with temporary entry to the Nigerian Foreign Exchange Market (NAFEM) to enhance the Naira’s strength. 

The short-term action, revealed last Friday, will be implemented from December 19, 2024, until January 30, 2025.

With the new policy, BDC operators are able to access up to $25,000 per week, with transactions needing upfront funding at current market rates and limited to a maximum spread of 1%.

Initiatives to strengthen the Naira

At the start of this month, the CBN introduced the Electronic Foreign Exchange Matching System (EFEMS), a system aimed at enhancing transparency and efficiency in forex trading.

Omolara Duke, CBN’s financial markets director, said EFEMS ensures “transparent, fair, and efficient FX trading” while enforcing compliance with regulations. 

The initiative, operational since December . 2, 2024, has already helped the Naira gain over N250 against the dollar in the official market.

Impact on parallel markets

The EFEMS initiative has disrupted speculative trading and illicit currency exchanges, pushing demand to parallel markets and increasing pressure on BDCs. 

Allowing BDCs to access the official market aims to alleviate these pressures and stabilize the currency.

The CBN also issued updated guidelines for interbank FX trading via EFEMS, setting a minimum trade size of $100,000 to promote transparency and reduce market inefficiencies.

Supporting Market Stability

This temporary measure is part of the CBN’s broader strategy to stabilize the foreign exchange market, enhance liquidity, and reduce volatility. 

By involving BDCs in the official market, the apex bank seeks to curb speculative practices and address market imbalances.

The temporary integration of BDC operators into the official FX market underscores the CBN’s commitment to supporting the Naira while addressing Nigeria’s foreign currency challenges.