Yuletide: CBN Grants BDCs Access to $25,000 Weekly Forex Cap for Holiday Season

The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange from the Nigerian Foreign Exchange Market (NFEM), which was recently launched.

EKO HOT BLOG reports that in a circular dated December 19, 2024, and signed by T.G. Allu, on behalf of the CBN’s Acting Director of Trade and Exchange Department, the apex bank stated that the measure aims to meet seasonal retail demand for forex during the holiday period. The arrangement will be effective from December 19, 2024, to January 30, 2025.

According to the circular, BDCs are allowed to source forex from a single authorized dealer of their choice, provided they fully fund their accounts before accessing the market.

Transactions will be conducted at the prevailing NFEM rate, with BDCs required to maintain a maximum 1% spread when pricing forex for retail end-users. All transactions under this scheme must be reported to the CBN’s Trade and Exchange Department.

The circular stated “To meet expected seasonal demand for foreign exchange, the CBN is allowing temporary access for all existing BDCs to the NFEM for the purchase of FX from authorized dealers, subject to a weekly cap of $25,000 (Twenty-five thousand dollars only). This window will be open from December 19, 2024, to January 30, 2025.

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“BDC operators can purchase FX under this arrangement from only one authorized dealer of their choice and must fully fund their account before accessing the market at the prevailing NFEM rate. All transactions with BDCs should be reported to the Trade and Exchange Department, and a maximum spread of 1% is allowed on the pricing offered by BDCs to retail end-users.”

The CBN also reassured the public that Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) remain available through banks for legitimate travel and business needs. These transactions will continue at market-determined exchange rates within the NFEM framework.

The CBN reiterated its commitment to maintaining a functional and liquid foreign exchange market while addressing price volatility.

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This latest directive follows the apex bank’s revised guidelines for the Nigeria Foreign Exchange Market, issued last month. The guidelines reintroduced the ability for licensed BDCs to purchase forex directly from authorized dealers for the first time in years, though subject to a monthly cap. The specific cap was not disclosed.

Since the NFEM’s introduction, the naira has shown relative stability. According to CBN data, the naira strengthened against the dollar on Thursday, closing at ₦1,540/$, a ₦5 gain from Wednesday’s rate of ₦1,545/$ at the NFEM. The naira’s value in the black market also remained relatively stable at ₦1,660/$.

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