Nigeria: CBN Temporarily Opens FX Window for BDC Operators at NFEM Rate

The Central Bank of Nigeria (CBN) has introduced a temporary window allowing Bureau de Change (BDC) operators to access US dollars at the Nigerian Foreign Exchange Market (NFEM) rate. This measure is designed to address the heightened demand for foreign exchange typically experienced during the year-end season.

The initiative permits BDC operators to purchase up to $25,000 weekly from authorized dealers at the official exchange rate. This move aims to stabilize the exchange rate and support invisible foreign exchange transactions, such as personal and business travel allowances (PTA/BTA).

Details of the Temporary FX Window

A circular from the CBN outlined that the window will be operational from December 19, 2024, to January 30, 2025. Under the arrangement, BDC operators must fully fund their accounts before accessing the market at the prevailing NFEM rate.

Key provisions include:

• Weekly Cap: BDC operators can purchase a maximum of $25,000 per week.
• Single Dealer Rule: Operators can only transact with one authorized dealer of their choice.
• Pricing Spread: A maximum spread of 1% is permitted on pricing offered by BDCs to retail customers.
• Transaction Reporting: All transactions conducted under this scheme must be reported to the Trade and Exchange department.

Support for Legitimate FX Transactions

The CBN reaffirmed the availability of PTA/BTA through banks, emphasizing that all legitimate and eligible foreign exchange transactions will continue to be processed at the market-determined exchange rate within the NFEM.

“The CBN remains committed to ensuring a fully functional foreign exchange market and will intervene as necessary to manage price volatility,” the apex bank stated.

This measure is part of broader efforts to maintain exchange rate stability and ensure the availability of foreign currency during peak periods, reinforcing the CBN’s commitment to a balanced and efficient FX market.