Naira Strengthens Slightly to N1,597/$1 Ahead of MPC Meeting Amid Forex, BDC Sector Tensions
The Nigerian naira appreciated slightly to N1,597 per US dollar at the official market on Monday, showing modest improvement from Friday’s rate of N1,599.01/$1, according to the Central Bank of Nigeria (CBN). Similarly, the parallel market witnessed a marginal gain as the naira traded at N1,627/$1, compared to N1,628/$1 at the end of last week. These gains, though minor, suggest relative short-term stability in the foreign exchange market.
Market observers attribute this resilience to recent policy measures and cautious optimism ahead of the Central Bank’s 300th Monetary Policy Committee (MPC) meeting, taking place May 19–20, 2025. Analysts expect the committee to either maintain the Monetary Policy Rate (MPR) at 27.5% or consider a modest 25 basis point increase. This decision hinges on ongoing inflationary pressures and the need to sustain macroeconomic improvements.
At the last MPC session in February, the central bank retained its key monetary indicators: MPR at 27.5%, Liquidity Ratio at 30%, and the Cash Reserve Ratio (CRR) at 50% for commercial banks. Economists believe the MPC is unlikely to shift from its hawkish tone, given the volatility in the FX market and the impact of global economic uncertainties. Even with slight appreciation, the naira remains under stress from demand-supply imbalances.
In parallel, the Bureau De Change (BDC) sector is facing a looming crisis as over 95% of operators are yet to comply with the CBN’s new recapitalization mandates. According to Aminu Gwadebe, President of ABCON, fewer than 5% of BDCs have met the new capital requirements. This raises concerns of a sector-wide shutdown if the June 2025 deadline is not extended or reviewed.
The recapitalization move—raising minimum share capital to N2 billion for Tier 1 and N500 million for Tier 2 licenses—represents a dramatic shift from the previous N35 million threshold. As the deadline nears, calls for regulatory flexibility are increasing amid fears that non-compliance could disrupt FX liquidity in the retail segment and worsen pressure on the naira despite recent improvements.
Source: Nairametric