Nigeria bans street trading of FX in new rules to stem naira slide
TLDR
- Nigeria to ban street-trading of foreign currency, higher capital requirements for Bureau de Change operators
- Central bank regulations target informal hard currency trading in Lagos and Abuja
- Bureau de Change operators to meet increased 2 billion naira capital requirement for national operation
Nigeria is set to prohibit the street-trading of foreign currency within the country, according to new regulations outlined by the central bank. These regulations also include higher minimum capital requirements for Bureau de Change operators. The guidelines were issued by the central bank in a document published late on Friday, although the effective date of these regulations was not specified.
Street trading of hard currency is a common sight in the business districts of Lagos and Abuja, where individuals or agents of Bureau de Change officials sell foreign currency. This practice is often conducted outside of formal office settings to reduce operating costs.
Under the new guidelines, Bureau de Change operators will be mandated to have a minimum capital requirement of at least 2 billion naira ($1.28 million) to operate at a national level, which represents a significant increase from the current requirement of 35 million naira.
Key Takeaways
The recent measures are part of broader reforms aimed at addressing challenges in Nigeria's currency market, which has faced persistent dollar shortages. These shortages intensified after foreign investors withdrew following a previous oil price collapse and the implementation of capital controls in 2015. The official exchange rate of the naira has been closely aligned with the parallel market rate following a recent devaluation of the currency, which marks the second adjustment in less than a year. The ongoing dollar shortage has exerted downward pressure on the Nigerian currency. As of Monday, the naira strengthened to 1,550 per dollar on the parallel market, reaching a level similar to that of the official market. This represents a slight improvement from the previous week when it traded at 1,800 naira per dollar. The Central Bank of Nigeria is expected to conclude a two-day policy meeting on Tuesday, with analysts anticipating a significant increase in interest rates by 225 basis points to 21.00%. This meeting marks Governor Olayemi Cardoso's first since assuming office in September.
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