CBN: Naira Official-BDC Gap Now Below 2%

The gap between Nigeria's official naira exchange rate and rates offered by Bureau de Change operators has narrowed to below two per cent, the Central Bank of Nigeria disclosed on Tuesday, marking a milestone in the country's effort to unify its foreign exchange market.

The announcement came as external reserves crossed $52.5 billion, their highest level in 17 years, driven by sustained foreign exchange inflows and renewed investor confidence.

The Narrowing FX Gap

At the CBN Fair in Gombe, Governor Olayemi Cardoso, represented by Acting Director of Corporate Communications Hakama Sidi-Ali, said the spread between official and parallel market rates has shrunk dramatically since reforms began in 2023.

He credited disciplined monetary tightening, exchange rate reforms, and enhanced market transparency. On Tuesday, August 4, the naira closed at N1,362/$ at the official market, up from N1,365/$ on Monday.

Reserves Climb, Then Dip

External reserves crossed $52.5 billion by July 17, exceeding the CBN's annual target. They had grown from $49.80 billion on June 1 to $51.04 billion by June 18, closing June at $51.46 billion, after a $1.22 billion rise in May and a $1.90 billion gain between end-May and end-June.

In early July, reserves rose from $51.53 billion on July 3 to $51.71 billion by July 8. But after peaking near $52.04 billion, they slipped across seven days: $52.03 billion on July 23, $52.02 billion on July 24, $51.97 billion on July 27, $51.94 billion on July 28, and $51.92 billion by July 29. Even so, the balance stayed about $463 million above June's close.

Monetary Policy Unchanged

The Monetary Policy Committee, at its 306th meeting on July 20 and 21, held the Monetary Policy Rate at 26.5 per cent. The Cash Reserve Ratio remained at 45 per cent for commercial banks and 16 per cent for merchant banks, while the Standing Facilities Corridor stayed at +50/-450 basis points around the MPR. The CRR on non-TSA public-sector deposits was kept at 75 per cent.

Reforms Reshaping the Market

Since 2023, the CBN has introduced the unification of the FX market, banking recapitalisation, the Non-Resident Bank Verification Number, the B-Match FX trading system, and the Nigeria Payments System Vision 2028.

The CBN and the Financial Markets Dealers Association also launched the Nigerian Overnight Financing Rate as a benchmark for short-term funding, providing a transparent, market-based reference aligned with international standards.

Engaging Beyond the Financial Hubs

CBN Branch Controller in Gombe, Yunusa Buba-Mubi, said the fair was part of the bank's public engagement programme to educate Nigerians on its policies and gather stakeholder feedback. The Gombe event reflects a push to take central bank communications beyond Lagos and Abuja.