Nigeria: CBN to Resume Weekly FX Interventions Through BDCs to Strengthen Naira

In a significant move aimed at bolstering financial stability and reinforcing the value of the naira, the Central Bank of Nigeria (CBN) is poised to reintroduce its weekly intervention in the foreign exchange (FX) market through Bureau de Change (BDC) operators.

This decision follows the cessation of foreign currency sales to BDC operators in 2021, part of efforts to safeguard the local currency’s value and maintain financial system stability. The resumed intervention, scheduled to commence on Monday for funding and Tuesday for collection, will entail injecting FX by the apex bank into the BDC subsector to mitigate the naira’s depreciation against major currencies, particularly the US Dollar.

Designated CBN branches in Lagos, Abuja, Kano, and Awka will manage collection, with details regarding funding bidding naira accounts to be provided on Monday.

Furthermore, the CBN will release a list of eligible BDCs to receive funding based on specific compliance criteria. The Association of Bureau De Change Operators of Nigeria (ABCON) conveyed these developments to its members through a weekend memo.

ABCON cautioned its members that the new supervisory regime of the Central Bank of Nigeria (CBN) would bring significant changes. Any infringement or infraction will result in the outright revocation of licenses and prosecution.

Following engagements with the CBN and strategic partners, ABCON secured the central bank’s agreement to inject liquidity into the market through a weekly intervention starting Monday. The CBN also assured ABCON that the Revised Regulatory and Supervisory Guidelines for BDCs, introduced over the weekend, were still in draft form and required input from the association before finalization.

ABCON reassured its members that the guidelines were not final and could be revised based on the association’s feedback. The guidelines, which include a minimum capital requirement of N2 billion for national BDCs and N500 million for state BDCs, are part of the ongoing reforms to enhance the regulatory framework of the Nigerian Foreign Exchange market.