CBN Approves BDCs Participation in FX Market, Caps Sale at $150,000 Weekly

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) has approved weekly foreign exchange (FX) purchases for Bureaux de Change (BDC) operators, with a cap of $150,000, as part of efforts to improve foreign exchange liquidity in the retail segment of the market and meet the legitimate needs of end users.

This comes as the apex bank once again approved the participation of licensed BDCs in the Nigerian Foreign Exchange Market (NFEM), noting that utilisation complies with existing BDC operational guidelines.

Under the new directive contained in a circular signed by the Director of the Trade and Exchange Department, Mr Musa Nakorji, all BDCs duly licensed by the CBN are permitted to access foreign exchange through any Authorised Dealer Bank of their choice, at the prevailing market rates.

The move, according to the circular, aims to deepen market efficiency and ensure broader access to foreign exchange across the economy.

The central bank, however, imposed strict compliance and risk-management conditions on the transactions. Authorised dealers are required to conduct full Know-Your-Customer (KYC) and due diligence checks on BDC clients before any FX sale.

To strengthen transparency and accountability, the CBN directed that all licensed BDCs must submit timely and accurate electronic returns in line with extant regulations. Any unutilised foreign exchange must be sold back to the market within 24 hours, as BDCs are prohibited from holding FX positions purchased from the NFEM.

The circular further restricts settlement practices, mandating that all FX transactions be conducted through settlement accounts with licensed financial institutions. Third-party transactions are prohibited, while cash settlement is limited to a maximum of 25 per cent of each transaction amount.

Overall, the directive reflects the CBN’s broader strategy to balance market access with strong regulatory oversight, ensuring liquidity in the foreign exchange market while safeguarding financial system integrity.

Recall that earlier this week, the Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, explained that the central bank now allows the foreign exchange market to largely determine prices, while the bank steps in to buy foreign exchange when necessary.

The CBN boss said recent reforms have also made foreign exchange more accessible to ordinary Nigerians, especially those travelling abroad, while warning that Nigerians who are holding foreign currency without real need that such actions could lead to losses.