Nigeria’s Central Bank permits IMTOs to sell FX on official window as naira finds stability

Nigeria’s Central Bank will allow International Money Transfer Operators (IMTOs) to sell forex on the official window as the naira maintains relative stability.

Eligible IMTOS will access the CBN window directly or through authorised dealer banks, the CBN said in a circular on Monday. The transactions will be based on prevailing NAFEM rates.

“All licensed IMTOs are reminded that all diaspora remittances are expected to terminate in Naira and match with the corresponding foreign currency inflows,” the circular added.

This is the regulator’s latest move to encourage remittance flows through formal channels and reduce the role of the parallel market. In May, the regulator banned street trading of dollars and sharply increased capital requirements for Bureau de Change operators.

The CBN has taken tough reforms allowing the naira to trade freely against the dollar and unifying the exchange windows. It also cleared a $7 billion FX backlog. The moves produced some immediate gains for the naira but were reversed. However, the naira has been relatively stable in recent weeks due to increased inflows.

The naira traded at 1,488 per dollar on Monday, according to the latest available data on the NAFEM window. It changed hands at around 1,500 naira per dollar on the same day in the parallel market, according to reports. A $2.25 billion financial support package from the World Bank is also expected to boost FX liquidity.