Dollar to Naira rate today


The Pros and Cons of Multiple Rates

Abokifx live The Dollar to Naira rate in Nigeria fluctuates from time to time and from agency to agency, depending on whom you ask. This is because Nigeria has what is known as multiple or dual dollar to naira exchange rates.

With these multiple Dollar to Naira rates, Nigeria manages to keep her currency rates rather stable when compared to many other countries with floating exchange rates because they are market managed. The dual exchange rate policy is a type of currency management policy where the official central bank structure of a nation is in charge of the exchange rate of the official currency in a limited range. However, in a dual exchange rate policy, apart from the Central bank, the nation’s currency is usually also traded at a different value in the unofficial parallel markets.

Bureau De Change Dollar To Naira Rate (BDC)

Bureau de change dollar to naira

According to the Central Bank of Nigeria, a Bureau De Change (BDC) is defined as a retail foreign exchange dealer carrying on the business of Personal Travel Allowance (PTA), Business Travel Allowance (BTA), medical and school fees, and also carrying on inward and outward transfer. Therefore, a BDC is a licensed outfit. The license is usually issued by the CBN.

There are BDC operators all over the world and they play different roles. According to the Association of Bureau De Change Operators of Nigeria (ABCON), the basic role of BDCs globally is to ensure the availability of forex to the critical retail sector of the forex market in terms of supply, and also to bridge the gap between the official and the parallel market exchange rate.

BDCs help to provide liquidity and ensure rate convergence. In addition, they help in the actualization of CBN’s major policy, which is the stability of the exchange rate.

Before BDCs were officially allowed into the Nigerian foreign exchange market, CBN had spent several years trying to find a way to converge the exchange rates, but it was unsuccessful. Some of the methods that the apex bank employed to tackle the issue of spikes in the foreign market included trying different auction systems such as Wholesale Dutch Auction and Retail Dutch Auction, but all these failed to deliver the desired result. In 2006, CBN finally considered allowing BDCs into the official market.

Back then the market had a gap ranging from N50 to N60, but as soon as BDCs were allowed into the official market, the rates converged to a difference of only 50 kobo between the parallel market and the official market within one month. Hence, the role of BDCs in ensuring the convergence of rates, elimination of spikes, uncertainty and volatility in the forex rates, and stability of exchange rate cannot be overemphasized. BDCs have also contributed to the elimination of speculations, rent seeking and currency exportation.

The basic role of BDCs globally is to ensure the availability of forex to the critical retail sector of the forex market in terms of supply, and also to bridge the gap between the official and the parallel market exchange rate.

Parallel (Black) Market

Black market dollar to naira rate

The black market rate is one that differs from the official exchange rate fixed by a government. It occurs when the official rate bears little or no relationship to the currency’s actual value.

The CBN has labelled activities in the parallel market as illegal business. According to the apex bank, people who patronize the black market are “doing dealings that are not recognized by authorities.”

This is because according to the CBN, “The black market is not a good determinant of the value of the naira. That market is mainly patronized by people who are in a hurry and do not want to procure the kind of documentation required.”

The CBN has labelled activities in the parallel market as illegal business.

Secondary Market Intervention Sales (SMIS)

The SMIS window was created by CBN for importers to ease the pressure faced by businesses in the foreign exchange market. This is done by the sales of foreign currency to authorized dealers (wholesale) or to end users through authorized dealers. It is the market where importers bid for forex using Letters of Credit and Form M. The bidding for forex at the SMIS window takes place every fortnight. The higher the bid the better one’s chances of getting forex.

Investors’ and Exporters’ (I&E) Window

The Investors’ & Exporters’ FX Window (I&E FX Window) is the market trading segment for Investors, Exporters and End-users. It was established by the Central Bank of Nigeria (CBN) via a circular dated April 21, 2017.  In the I&E window, FX trades can be made at exchange rates determined by prevailing market circumstances. This ensures efficient and effective price discovery in the Nigerian FX market.

People who can participate in the I&E FX Window include: The CBN, (this way, they can promote professional market conduct and liquidity); willing sellers of FX, such as Portfolio Investors, Exporters, and so on. Other verified participants include CBN-licenced Authorised Dealers (FMDQ Dealing Member (Banks)) and End-users. What are the Permitted Transactions at the I&E FX Window? Transactions that are permitted to access the I&E FX Window include Invisible Transactions (such as remittances for school fees, Business Travel Allowance (BTA), student maintenance allowances, Personal Travel Allowance (PTA), medical fees and other eligible transactions excluding International Airlines Ticket Sales’ Remittances). Other eligible transactions include bills for Collection and any other trade-related payment obligations (at the instance of the customer).

The Nigerian Autonomous Foreign Exchange (NAFEX)

NAFEX is the reference rate for Spot FX operations in the Autonomous FX Market. The Autonomous FX Market is comprised of recognised FX trading segments, which include, but are not limited to the Inter-bank market, the I&E FX Window and any such approved and recognised trading segment as may be defined from time to time. NAFEX is used in daily valuation and settlement of the OTC FX Futures Contracts. To gain access to the FMDQ eMarkets Portal, one has to either become a Member of FMDQ or subscribe to any/all of the data bouquets available on the FMDQ e-Markets Portal.


Despite its apparent advantages, the multiple exchange rate also has its disadvantages. The International Monetary Fund believes that it creates a lot of distortion in prices, hurts businesses, and encourages corruption as it is susceptible to manipulation. The unified exchange rate has been identified as a very effective tool for resource allocation. It will encourage transparency and help attract more Foreign Direct Investment (FDI). This is why the IMF has been putting pressure on Nigeria to unify the various exchange rates that are currently applicable in Nigeria. 

The CBN has labelled activities in the parallel market as illegal business.


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