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Nigeria Bans Sale of Foreign Exchange to Currency Traders

The Central Bank of Nigeria says it has ended the sales of foreign exchange (forex) to bureau de change operators, saying the parallel market has become a conduit for illicit forex flows, as well as graft. According to Central Bank Governor Godwin Emefiele, the step was taken because some operators have become greedy in their chase for higher profits and their demand for foreign currency is placing pressure on the naira and the nation's reserves. "The central bank will only supply dollars through commercial lenders from now on. The central bank will deal ruthlessly with banks allowing illegal forex dealers to use their platforms and will report the defaulting international organizations to their regulators," the governor said.

The measure may lead to an initial depreciation in the naira's value as the sudden withdrawal of supply from the central bank causes the price of dollars to increase. Nigeria previously banned foreign exchange sales to money traders in March 2020, to prevent people congregating at bureaus de change at the onset of the novel coronavirus pandemic. 

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