By Springs News NG | March 10, 2025

Bureau De Change (BDC) http://Bureau De Change (BDC)operators have raised concerns over their inability to access dollars from commercial banks, despite directives from the Central Bank of Nigeria (CBN). According to the operators, this situation is contributing to the instability of the naira.

Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), stated that BDCs are struggling with limited forex supply, unfavorable exchange rates, and reduced margins. These challenges, he noted, have fueled speculative trading and currency substitution, weakening the naira further.

Naira Depreciation Deepens

The naira experienced a sharp decline last week, closing at ₦1,580 per dollar on Thursday and Friday, marking a 3.5% drop from ₦1,525 per dollar on Wednesday in the parallel market.

At the official FX market, the currency depreciated by ₦43 on Friday, with the dollar quoted at ₦1,542, compared to ₦1,499 on Monday. Data from FMDQ Securities Exchange Limited also showed a drop, with the naira closing at ₦1,512.30 per dollar, down from ₦1,500.80 at the Nigerian Foreign Exchange Market (NFEM).

Declining Treasury Bill Yields and Foreign Investment

Nigerian treasury bill yields have fallen sharply due to rising market liquidity and declining inflation rates. Ayodeji Ebo, managing director at Optimus by Afrinvest, explained that lower yields could reduce Foreign Portfolio Investment (FPI) inflows, limiting foreign exchange availability.

“With expectations of lower interest rates, investors are locking in current attractive rates, reducing liquidity available for speculative activities or dollar-denominated investments,” Ebo noted.

Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co., identified multiple factors affecting the naira but pointed to declining yields as a major contributor. Similarly, Tilewa Adebajo, CEO of CFG Advisory, attributed the currency’s weakness to speculation in the market.

BDC Operators Demand Policy Adjustments

Gwadabe highlighted key concerns affecting BDC operations, warning that continued constraints could erode confidence in the FX market framework.

To stabilize the exchange rate, he urged the CBN to refine its interventions in the retail forex market. His recommendations included granting approval for licensed operators to import dollar cash and implementing a transparent monitoring system for banks’ dollar sales to BDCs.

“The CBN must sustain its interventions, approve dollar imports for BDCs, and enforce a transparent bank-dollar sales framework,” he emphasized.

Beyond monetary measures, Gwadabe called on fiscal authorities to address Nigeria’s fiscal deficit, boost productivity, and improve communication on economic policies. He also urged the government to declare a state of emergency on inflation to curb rising prices and ensure economic stability.

A BDC operator, who spoke anonymously, confirmed that banks were not supplying them with dollars as required.

CBN’s Temporary Forex Market Access for BDCs

In December 2024, the CBN granted BDCs temporary access to the NFEM from December 19, 2024, to January 30, 2025, later extending the deadline to May 30, 2025. Under this arrangement, BDCs can trade up to $25,000 weekly, with transactions requiring upfront funding at prevailing exchange rates and a maximum spread of 1%.

Despite this policy, operators say the lack of dollar supply from banks continues to hamper their business, raising concerns about the effectiveness of the CBN’s interventions in stabilizing the naira.