Babajide Babatunde M (BBM)
3 min readFeb 2, 2024


My 2 Cents on CBN’s Circular to Remove Allowable Limit of Exchange Rate Quoted by IMTO and the CBN’s Order that all banks should sell their excess USD in 24 hours.

Recall mid-2023 when I spoke about the FX revaluation gains made by Nigerian banks (especially FUGAZ - I shared the analysis of their mid-year financial statements).

I noted that these profits were as a result of gains on the devaluation of the naira against foreign currencies that many of these banks are holding as reserves.

While multinational FMCG companies that produce essential products were collapsing, Nigerian Banks were jubilating.

To this effect, the CBN issued a circular addressing suspected cases of excessive foreign currency speculation and hoarding from Nigerian banks.

The practice before this circular was that Banks were allowed to hold dollar stock as much as they want and that has contributed alot in hoarding the dollar and creating artificial scarcity in the market.

The CBN however issue a circular with reference TED/FEM/PUB/FPC/001/009 dated September 13, 2023 stating that International Money Transfer Operators (IMTO) are required to quote rates within an allowable limit of -2.5% to +2.5% around the previous day’s closing rate of the Nigerian Foreign Exchange Market.

This implies that, if the previous day's closing rate in the Nigerian Foreign Exchange Market was 1,000 Naira to 1 USD, the allowable limit mentioned in the circular would mean that International Money Transfer Operators should quote rates within the range of 975.00 Naira to 1,025.00 Naira for 1USD. The quoted rate implies the buying and selling rates.

However, in line with the CBN’s commitment to liberalize the Nigerian Foreign Exchange Market, IMTOs are hereby allowed to quote exchange rates for naira payout to beneficiaries based on the prevailing market rates at the Nigerian Foreign Exchange Market on a willing seller, willing buyer basis.”

This underscores the concept of a free economy by allowing exchange rates to be determined by factors such as inflation, demand & supply, FDI, and so on.

Previously, due to exchange rate limits, diaspora Nigerians using IMTOs to send money home couldn’t sell forex at market rates, leading to reduced forex liquidity in Nigeria.

Experts opined that the recent changes aim to encourage IMTOs to freely bring their FX supply into Nigeria, rather than keeping it abroad.

Diaspora remittances in Nigeria is estimated at around $25 Billion yearly. This went down to virtually $0 in 2023. The FX flows were just not coming into Nigeria.

USD/NGN was been converted by IMTOs but the USD remained offshore and never inflowed into Nigeria. Part of the reason remittance flows weren’t coming into the country was because the margins were capped (at +/-2.5%), which made the IMTOs resort to settling offshore instead of bringing the liquidity in.

Whether the above policies will provide short-term solutions to the FX crises in Nigeria may appear as a subjective discussion. However, my strong opinion is that the policies would result in little or nothing in the long term.

As I have always mentioned, until Nigeria boosts local produce and fixes insecurity for farming, the FX crisis will continue to be a major issue in the Country.

You can't tackle fiscal issues with monetary policies. Nigeria’s FX issues are fundamentally rooted in insecurity and low productivity levels.

On another note - fixing oil theft and increasing oil production to stabilize the economy in the short term looks like a viable idea.

The order for banks to sell the “excess” USD within 48 hours also seems tricky. Firstly, what is the definition of “excess” and what is the mechanism put in place that banks don't sell this USD to related entities to retain wealth?

Money should be means of exchange, but in Nigeria, money has become a commodity being traded in a speculative market.

I encourage stakeholders to look into this closely and do the needful. And to the CBN Gov., Cardi B, this is a time to hold MPC meetings freequnemty to discuss vital issues on how to move the country forward. The meeting is beyond increasing and reducing MPR

God bless Nigeria.

Disclaimer: Bio




Babajide Babatunde M (BBM)

A seasoned and resourceful tax and financial market analyst, knowledgeable and with great learning skills.