CBN Extends FX Sales to May 2025, Boosting Market Stability

List of banks excluded from the first Dutch auction held by CBN
CBN Headquarters, Abuja

The Central Bank of Nigeria (CBN)’s recent decision to extend the Foreign Exchange (FX) sale period until May 30, 2025, has garnered positive reactions from the Association of Bureau de Change Operators of Nigeria (ABCON). 

Dr. Aminu Gwadabe, President of ABCON, praised the move, highlighting it as a testament to the CBN’s unwavering commitment to stabilizing Nigeria’s volatile foreign exchange market.

In an official statement, Dr. Gwadabe emphasized that the extension reflects the CBN’s strategic efforts to foster market stability and inclusivity through mechanisms like the Electronic Foreign Exchange Matching System (EFEMS).

He said, “ABCON and its members view this decision favorably as part of the CBN’s continuous efforts to maintain stability and inclusiveness within our subsector in the EFEM Market.”

The announcement was formalized through a circular signed by Dr. W. J. Kanya, CBN’s Acting Director of the Trade and Exchange Department. Titled “Sales of Foreign Exchange to BDCs to Meet Retail Market Demand for Eligible Invisible Transactions,” the circular officially extends the FX sales deadline from January 31 to May 30, 2025.

Under the new directive, Bureau de Change (BDC) operators are authorized to purchase foreign exchange from licensed dealers with a weekly cap of $25,000.

Despite the positive reception, Dr. Gwadabe expressed concerns over the lack of compliance by some deposit money banks with the CBN’s initial directive from December 2024. He urged these financial institutions to align with the apex bank’s policies to support liquidity in the retail FX market and ensure the Naira’s stability.

“To guarantee liquidity at the retail end and uphold the Naira’s stability, we call on all deposit money banks to work collaboratively with the CBN and ABCON members to implement this directive effectively,” Gwadabe stated. He commended the CBN’s leadership for their adaptability and proactive measures in addressing FX market volatility.

Historically, BDCs were restricted from accessing foreign exchange directly from official channels as part of broader FX market reforms. However, in response to recent market volatility and widening gaps between official and parallel market exchange rates, the CBN reinstated limited FX sales to BDCs in December 2024.

This move aimed to curb liquidity shortages and deter speculative activities and hoarding within the market.

The extension of FX sales to BDCs is expected to provide sustained access to foreign currency, offering stability and predictability for businesses and individuals reliant on BDC services for their FX needs.

However, the long-term success of this strategy in maintaining currency stability remains contingent on broader macroeconomic factors such as inflation rates, foreign reserves, and foreign investment inflows.

As Nigeria navigates complex economic challenges, the CBN’s proactive measures and effective collaboration between financial institutions and regulatory bodies will be crucial in shaping a more stable and resilient FX market landscape.

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