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The Central Bank of Nigeria’s (CBN) decision to allow Bureau De Change (BDC) operators to participate in the Nigerian Foreign Exchange Market (NFEM) is already reshaping currency dynamics, triggering a notable narrowing of the gap between official and parallel market rates.
Last week, the apex bank issued a circular to all Authorised Dealer Banks and the general public, outlining the guidelines for BDC participation in the NFEM. This move aims to improve dollar liquidity in the retail segment and curb sustained pressure in the parallel market.
Since the circular’s release, the foreign exchange gap between official and parallel markets has narrowed significantly, even before BDCs have fully accessed dollar supply. The exchange rate spread, which widened to N92 as of Wednesday last week, closed to N33 by Monday.
The naira climbed to a two-year high of N1,347.78 per dollar in the official FX market, further narrowing the spread with the black market. In the parallel market, the local currency strengthened sharply to close at N1,380 per dollar, reflecting a 2.89% improvement from N1,420 recorded on Friday.
Market analysts attribute the rally to the CBN’s move, which is expected to improve retail dollar supply and temper speculative demand. Olayemi Cardoso, CBN governor, had stated in November 2025 that the naira was trading within a narrow range, with the premium between official and parallel markets shrinking to below 2%.
The International Monetary Fund (IMF) noted in 2023 that several countries, including Nigeria, experienced large exchange rate spreads in parallel markets. In Nigeria, the spread remained elevated at N273 per dollar in 2023, underscoring structural distortions in the FX market.
Under the latest circular, licensed BDCs can purchase foreign exchange from the NFEM through authorised dealer banks at prevailing market rates. The directive aims to ensure adequate liquidity and meet legitimate end-user needs.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), praised the circular as a significant step toward strengthening financial inclusion and enhancing liquidity. Market analysts expect the measure to address the widening gap, boost investor confidence, and restore stability to the naira.
The CBN’s move is part of its efforts to deepen the FX market, improve transparency, and reduce speculative distortions. The apex bank had previously confirmed 82 BDC operators were fully licensed to commence operations in November 2025.
As expectations of improved dollar supply and stricter compliance oversight grow, analysts say the inclusion of BDCs in the official FX window represents a strategic shift aimed at sustaining convergence between Nigeria’s previously fragmented exchange rate markets.
The move has sparked optimism about the naira’s prospects, with analysts predicting further strengthening in the coming weeks. However, challenges remain, including the need for sustained policy consistency and efforts to address underlying economic fundamentals.
The CBN’s latest directive is expected to have a positive impact on the stability of the local currency, addressing the stubborn and persistent wide margin between the NFEM rate and the unregulated market.
CBN Moves to Boost Forex Stability Through BDC Inclusion. By Clem Aguiyi
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