FG Bans Naira Street Trading as Battered Currency Takes Another Hit

The Federal Government stepped up efforts to curb speculation against the battered naira, slapping tough new conditions on bureau de change and banning street trading in foreign currency.

The Central Bank of Nigeria sharply increased capital requirements for the nation’s BDCs, citing the need to regulate the sector and ensure it isn’t undermining the value of the local currency.

“Street trading of foreign currencies is not allowed,” said Blaise Ijebor, CBN director for risk management. “We don’t want BDCs under the trees. They should be in offices, you walk into their office, change your currency and walk away,” he told a conference in Lagos on Thursday.

The CBN recently reviewed minimum capital requirements for Tier 1 BDC operators to N2 billion while for Tier 2 BDC operators is N500 million.

Ijebor said that the increase in capital was so that they have enough money to invest in the needed infrastructure to provide adequate services, and comply with regulations.

The naira on Thursday fell across foreign exchange (FX) markets, despite a 35.72 percent increase in dollar supply at the official market.

At the close of trading on Thursday, the naira lost 1.55 percent of its value, as the dollar was quoted at rate of N1,485.66, weaker than N1,462.59 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the market summary released by the FMDQ Securities Exchange Limited.

At the parallel market, the Naira on Friday depreciated further against the US currency, losing N15 of its value to close at N1,515.

“One of the things we want to do is make BDCs focus on the original conceived vision, which is to provide that market structure for people who need to do small small transactions and do not need to go to the banks to do those transactions,” he said.

He said to regulate an industry, people who are regulated need to have enough strength to respond to that transaction.

“So we need BDC to come together to form bodies, that way regulation is not too extensive for them. They can receive regulation, apply to regulation, and everything will work better for everybody,” he said.

“And that is why we are increasing the capital so that they have enough money to invest in that infrastructure to provide this kind of service, or to full regulation,” Blaise said.

May 25, 2024