Naira Holds Steady in FX Market as CBN Boosts Dollar Supply to BDCs

Naira Slides to N1,544.50/$1 Officially, N1,647/$1 on Black Market
Nigerian Naira and US Dollars (Image Credit: Ripples Nigeria)

The Nigerian naira remained stable across all foreign exchange (FX) markets on Tuesday, buoyed by increased dollar liquidity following the Central Bank of Nigeria’s (CBN) decision to extend dollar access to Bureau De Change (BDC) operators. 

This move is part of the CBN’s broader strategy to enhance market stability and curb currency volatility.

According to data from the Nigerian Foreign Exchange Market (NFEM), the naira closed flat at N1,499 per dollar, maintaining the same level as the previous trading session. Authorized dealers quoted the dollar at a peak rate of N1,502, slightly below Monday’s N1,500 mark. Conversely, currency dealers sold the dollar at N1,494, compared to N1,480 on Monday, reflecting minor fluctuations driven by market dynamics.

Data from the FMDQ Securities Exchange Limited indicated that the naira experienced a marginal depreciation of 0.22%, slipping from an opening rate of N1,496.50/$ to a closing rate of N1,498.95/$ on Tuesday. This contrasts with Monday’s closing rate of N1,495.60. The data, derived using Bloomberg BMatch and the FMDQ Exchange FX Closing Rate Methodology, highlights the naira’s resilience amid shifting demand-supply conditions.

In the parallel market, often called the black market, the naira also showed remarkable stability, closing at an average of N1,600 per dollar – virtually unchanged from Monday’s rate of N1,599.33. Street-level transactions saw the dollar trading between N1,595 and N1,605, depending on location, signaling consistent demand tempered by improved dollar availability.

CBN Extends Dollar Access to BDCs

In a strategic move aimed at bolstering FX liquidity, the CBN announced an extension of temporary dollar access for BDC operators until May 30, 2025. This extension allows licensed BDCs to continue purchasing foreign currency under the same conditions outlined in the initial directive issued on December 19, 2024 (circular number TED/FEM/PUB/FPC/001/030).

The extension was communicated through a circular signed by W. J. Kanya, Acting Director of the Trade and Exchange Department. Originally slated to expire on January 31, 2025, the policy now offers a four-month extension, providing BDCs with sustained access to the official FX window. The circular reaffirmed that all other terms and conditions from the previous directive remain unchanged.

Under the current framework, BDCs can purchase up to $25,000.09 weekly from licensed dealers, catering to the retail market’s demand for invisible transactions. These include payments for travel, medical expenses, tuition, and other non-tangible services.

Market Implications

The CBN’s proactive measures have improved market sentiment, which is reflected in the naira’s relative stability across official and parallel markets. The apex bank aims to mitigate speculative pressures and ensure a more transparent, efficient FX market by increasing dollar supply and extending BDC access.

As the extension takes effect, market participants will closely monitor the naira’s performance, particularly as Nigeria navigates broader economic reforms and fluctuating global financial conditions. With these strategic interventions, the CBN underscores its commitment to fostering a stable, resilient currency environment that supports sustainable economic growth.

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