Market News

BY  Hope Moses-Ashike 

The naira gap, the spread between the official foreign exchange (FX) market and the parallel market narrowed further to N65 on Friday as Bureau De Change (BDC) operators prepared to access fresh dollar supply from banks this week, after the Central Bank reopened the FX market for the retail bureau.

The spread has contracted by 4.6 percent from N92 on Wednesday to N65 on Friday, reflecting renewed convergence between the two markets. Data published by the Central Bank of Nigeria (CBN) showed that the naira depreciated marginally for the second time this week, slipping by N1.76 as the dollar was quoted at N1,355.42 on Friday, a loss of 0.13 percent compared to N1,353.66 recorded on Thursday at the Nigerian Foreign Exchange Market (NFEM).

On a week-on-week basis, however, the naira gained N10.77 per dollar, closing at N1,355.42 on Friday compared to N1,366.19 in the same market a week earlier, according to CBN data.

Across the five trading sessions, the local currency strengthened marginally by N1.16 from N1,354.26 quoted on Monday at the NFEM.

In the parallel market, the naira appreciated further by N10 as the dollar was quoted at N1,420, representing a 0.7 percent gain compared to N1,430 traded on Thursday.

According to the Financial Market Dealers Association, the naira appreciated by an average of 2.47 percent in January 2026. “The naira traded into the N1,300 per dollar range in January, marking its strongest level since the second quarter of 2024. Crude oil prices rose above $70 per barrel toward month-end, reaching their highest level since September 2025. The naira’s performance was supported by firmer oil prices and a softer U.S. dollar toward the end of January,” FMDA analysts said.

Nigeria’s external reserves have sustained steady growth, rising to $47.53 billion as of February 10, 2026, according to CBN data.

Notably, the convergence trend began even before BDCs received actual dollar allocations from the Nigerian Foreign Exchange Market, suggesting that policy signalling alone influenced pricing expectations and dampened speculative positioning.

Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), said the early narrowing of the spread reflects market confidence in the apex bank’s communication strategy.

“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 stated that 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 apex bank’s confirmation in September 2025 that 82 BDC operators had been fully licensed under its revised regulatory framework, with operations commencing on 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, is expected to 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 climb to $47.53 billion as of February 10, 2026, strengthening the CBN’s capacity to sustain retail FX market interventions and support ongoing exchange rate convergence.