Naira Hits N1,430/$ at Parallel Market
The naira strengthened to between 1,425 and 1,430 per dollar at the parallel market following the Central Bank of Nigeria’s renewed directive allowing the sale of foreign exchange to Bureau De Change operators, a development stakeholders say is already narrowing the gap between official and open market rates.
The president of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadebe, in a chat with on Thursday, described the policy shift as a major boost for the retail foreign exchange segment, noting that early signs point to increased stability and improved liquidity conditions.
“This is very good news for us. Even before full implementation, we have already seen positive improvements in the exchange rate dynamics. The gap between the official and the parallel market used to be as wide as N84 to a dollar, but we have seen that margin reduce significantly to around N30 or N40. That level of convergence gives confidence that the market is moving toward stability.
“As of the time I left the office, the open market rate is around N1,425 to N1,430 to the dollar, and it has been trending downward. The dollar is falling in the parallel market because liquidity is improving and confidence is returning. The structure the CBN introduced allows us to access the official window transparently through banks.”
According to a circular on Tuesday, the BDCs are permitted to access up to $150,000 weekly through authorised dealer banks, which execute purchases from the official market on their behalf. The policy effectively reintegrates BDCs into the formal FX supply chain.
The CBN Director of the Trade and Exchange Department, Dr Musa Nakorji, who signed the circular, said that the move was aimed at improving foreign exchange liquidity in the retail segment of the market and meeting the legitimate needs of end users.
Economist Ayo Teriba said the development forms part of broader monetary and external sector reforms that are already yielding macroeconomic gains, particularly in reserve accretion and exchange rate stability.
He explained, “The re-admission of BDCs into the foreign exchange allocation framework is a continuation of reforms that began after the previous regime restricted their participation. What is more significant is the improvement in Nigeria’s net external reserves, which have risen to $30bn from about $24bn a year ago. Once reserves climbed above $20bn, we began to see exchange rate stabilisation, and as they rose further to $29bn and now $30bn, the naira started appreciating.
“With reserves at $30bn, Nigerians should be confident that exchange rate stability is here to stay. An appreciating naira will moderate inflation and restore purchasing power lost during the devaluation cycles of 2023 and 2024. As liquidity improves, we should see stronger performance across the stock market, bond market, and banking system, potentially driving significant capital gains this year.”
Teriba added that if the current trajectory is maintained, inflation and interest rates could both trend toward single digits, reinforcing a cycle of growth and financial market expansion.
Market analysts note that the narrowing spread between the official and parallel market rates signals reduced arbitrage opportunities and improved price discovery. CardinalStone in its daily market report said the naira appreciated by 0.70 per cent to settle at N1,435/$.
Meanwhile, the apex bank also imposed strict reporting and transparency requirements, directing that “all licensed BDCs shall ensure the timely and accurate submission of returns to the Central Bank electronically and in accordance with extant regulations.”
Also, BDCs are mandated to sell back all unutilised balances to the market within 24 hours, stating that “BDCs are not permitted to keep funds purchased from NFEM in their positions.”
“Settlement of foreign exchange transactions by BDCs with Authorised Dealers and/or with end-user customers shall be conducted exclusively through settlement accounts held with licensed financial institutions. Third-party transactions are prohibited, and settlement of foreign exchange sales in cash is limited to a maximum of 25 per cent of each transaction amount,” read part of the statement.
Economic Confidential reports that the CBN in December granted final licences to 82 Bureaux de Change to operate and warned members of the public against patronising unlicensed BDCs