CBN Dollar Sales to BDCs Narrow Naira Gap to N65 as Official and Parallel Rates Converge
The gap between Nigeria's official and parallel foreign exchange markets narrowed significantly on Friday, February 13, 2025, signaling renewed convergence in the currency market. This development follows the Central Bank of Nigeria's decision to reopen dollar sales to Bureau De Change operators, a move that has already begun to stabilize the nation's volatile forex landscape.
Market Convergence Accelerates
The spread between both market segments tightened to N65, down from N92 on Wednesday, representing a substantial 4.6 per cent contraction within just two trading sessions. This rapid narrowing occurred even before BDC operators began receiving actual dollar allocations, suggesting that the apex bank's policy announcement alone helped reset market expectations and temper speculative activity.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria, described the early convergence as evidence that policy communication is yielding tangible results. He confirmed that BDCs have initiated engagement with their banks to clarify operational procedures and access modalities under the new framework.
Naira Performance and Weekly Gains
Data from the Central Bank of Nigeria revealed that while the naira depreciated slightly by N1.76 on Friday, closing at N1,355.42 per dollar at the Nigerian Foreign Exchange Market compared to N1,353.66 on Thursday, the local currency posted an impressive week-on-week gain of N10.77. This represents strengthening from N1,366.19 recorded a week earlier, with the naira edging up by N1.16 across the five trading sessions from Monday's opening level of N1,354.26.
At the parallel market, the currency appreciated by N10 to close at N1,420 per dollar, compared to N1,430 on Thursday, further reinforcing the convergence trend between regulated and unregulated segments.
Revised Retail FX Framework Details
In a circular dated February 10, the central bank authorized duly licensed BDC operators to purchase foreign exchange from the Nigerian Foreign Exchange Market through any authorized dealer bank at prevailing rates. Under the revised framework, authorized dealer banks must conduct comprehensive know-your-customer checks and due diligence before selling foreign currency to BDCs.
Sales are restricted to eligible retail transactions, subject to a weekly cap of $150,000 per bureau. This reform follows the licensing of 82 BDC operators under the new regulatory structure introduced in late 2025, designed to formalize retail FX distribution and enhance market transparency.
External Factors Supporting Stability
According to the Financial Market Dealers Association, the naira appreciated by an average of 2.47 per cent in January 2026, trading within the N1,300 range at its strongest level since the second quarter of 2024. Analysts attribute this improvement to multiple supportive factors:
- Firmer crude oil prices, which climbed above $70 per barrel toward the end of January
- A softer U.S. dollar in global markets
- Strengthening external reserves, which rose to $47.53 billion as of February 10, 2026
These factors have collectively bolstered the central bank's capacity to support interventions and sustain retail foreign exchange supply, creating a more favorable environment for currency stability.
Market Analyst Perspectives
Market analysts, including prominent economist Charlie Robertson, assert that the CBN's measure should significantly reduce distortions in the currency market, improve price discovery mechanisms, and curb speculative pressures that have plagued Nigeria's forex landscape in recent years.
Industry operators believe that increased access to official dollar supply will narrow the persistent premium between regulated and unregulated market segments, strengthen investor confidence, and reinforce the role of BDCs in the country's foreign exchange transmission framework.
Broader Market Impact
The naira demonstrated strength against major currencies on Wednesday, February 11, following the CBN's announcement. In the Nigerian Foreign Exchange Market, the currency appreciated by N2.07 or 0.15% to N1,348.95 per US dollar from N1,351.02 on Tuesday. It also gained N6.46 against the pound sterling to N1,840.11/£1 and N6.36 on the euro to N1,600.13/€1.
With external reserves climbing and dollar supply channels reopening through BDCs, the convergence between official and parallel markets appears to be gathering momentum. This development offers cautious optimism for sustained exchange rate stability in Nigeria's economy, potentially marking a turning point in the country's efforts to achieve forex market normalization.
The narrowing spread represents a significant achievement in the CBN's ongoing efforts to unify exchange rates and reduce market fragmentation. As BDCs begin accessing fresh dollar supply from banks under the revised framework, market watchers anticipate further alignment between official and parallel rates, potentially reducing the arbitrage opportunities that have characterized Nigeria's dual exchange rate system.
