Market News

The gap between Nigeria’s official and parallel market exchange rates narrowed sharply to N77 on Thursday as Bureau De change Operators (BDCs) and banks began processes to access dollars after the Central Bank of Nigeria (CBN) reopened the official foreign exchange window to the segment.

Data from the CBN showed the naira depreciated slightly at the Nigerian Foreign Exchange Market (NFEM), weakening by N4.71 to close at N1,353.66 per dollar on Thursday, a 0.35 percent loss from N1,348.95 quoted on Wednesday.

In the parallel market, however, the local currency strengthened by N10, or 0.7 percent, to close at N1,430 per dollar compared with N1,440 the previous day. That movement compressed the spread between both markets to N77 from N92 on Wednesday, marking the first significant narrowing since the reopening announcement.

The convergence began even before BDCs received actual dollar allocations from the Nigerian Foreign Exchange Market, suggesting that policy signalling alone influenced pricing expectations.

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Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria, said the early narrowing of the spread reflects market confidence in the CBN’s communication.

“This is the strength of forward communication of the CBN and it is working perfectly,” Gwadabe said. He noted that BDC operators have started approaching their banks to understand the operational modalities and framework for accessing dollars. “We expect before the close of the week a comprehensive take-off of operations,” he added.

In a circular dated February 10, the CBN said all duly licensed BDCs are permitted to purchase foreign exchange from the Nigerian Foreign Exchange Market through any authorised dealer bank of their choice at prevailing market rates.

The move follows the CBN’s confirmation in September 2025 that 82 BDC operators had been fully licensed under its revised regulatory framework, with operations commenced November 27, 2025 as part of reforms aimed at formalising retail foreign exchange supply.

Under the new framework, authorised dealer banks are required to conduct full know-your-customer checks and due diligence on BDC clients in line with regulatory standards and internal risk management requirements. Upon completion, banks may sell foreign currency to BDCs strictly for eligible retail transactions, subject to a weekly cap of $150,000 per bureau.

Commenting on the development, Charlie Robertson, author of The Time Travelling Economist, said the measure should help ease distortions in the currency market.

Gwadabe described the clarification allowing BDCs access to the NFEM window through deposit money banks as highly commendable, saying it demonstrates the CBN’s commitment to financial inclusion and liquidity at the retail end of the market.

According to him, the circular will positively impact exchange rate stability, reduce the persistent premium between the official and unregulated markets, and improve price discovery. He said increased access to official supply would curb speculative activities and foster transparency and accountability in the foreign exchange ecosystem.

The policy shift, he added, would boost investor confidence in the sub-sector and the broader financial industry, while reinforcing the role of BDCs in the CBN’s foreign exchange transmission mechanism.

He also urged members to ensure strict compliance with prudential guidelines and anti-money laundering and counter-terrorism financing obligations as access to official supply resumes.

Meanwhile, Nigeria’s external reserves continued their steady rise, climbing to $47.53 billion as of February 10, 2026, according to data from the CBN, providing additional support for the Central bank’s renewed intervention capacity in the retail FX market.