Naira Strengthens in Parallel Market, Faces Decline in Official Window

The Nigerian naira experienced a notable appreciation against the US dollar in the parallel market on Wednesday, reaching N1,490 per dollar, a 2% increase from the N1,520 recorded on May 27.

Lagos-based currency traders, commonly known as bureau de change (BDC) operators, quoted the buying price of the dollar at N1,460 and the selling price at N1,490, resulting in a profit margin of N30.

In contrast, the naira saw a significant depreciation in the official foreign exchange (FX) market, dropping by 13.26% from N1,173.88/$ on May 28 to close at N1,329.65 on Wednesday. During trading hours, the exchange rate fluctuated between a high of N1,506 and a low of N1,010, according to the FMDQ Exchange, which monitors official FX trading in Nigeria. The daily FX market turnover was reported at $336.54 million.

Recently, the Central Bank of Nigeria (CBN) issued new guidelines for BDC operations, increasing the capital requirement for tier-1 operators from N35 million to N2 billion, and setting a N500 million capital base for tier-2 operators.

In response, the Association of Bureau De Change Operators (ABCON) has called on the CBN to revise these requirements. ABCON President Aminu Gwadabe proposed a capital base of N500 million for tier-1 operators and N100 million for tier-2 operators to facilitate easier mergers among BDCs. Gwadabe also suggested allowing BDCs to recapitalize instead of reapplying for licenses.