Nigerian FX Reforms to Promote Ethical Conduct

The Central Bank of Nigeria has approved the Nigeria Foreign Exchange (FX) Code, which is designed to promote ethical conduct in the foreign exchange market. The launch of the code is part of a series of reforms by the CBN to ensure stability in the foreign exchange market.

Initially unveiled in October last year, the FX Code introduces new standards to improve conduct and practices in Nigeria’s foreign exchange market. Inspired by the Global Foreign Exchange Code, the FX Code is part of the apex bank’s efforts to establish a more transparent, ethical, and orderly FX market, aligning local practices with global norms while addressing the unique challenges of Nigeria’s monetary environment.

The Code emphasises the promotion of integrity, price discovery, and transparency, areas that have long been contentious given the naira’s volatile nature and the apex bank’s interventions. Beyond being a local adaptation, the CBN FX Code represents a significant policy shift to strengthen the regulatory framework around foreign exchange trading in Nigeria.

Speaking on the impact of the foreign exchange reforms in the country, governor of the CBN, Olayemi Cardoso, noted that there has been a reduction in the disparity between the Bureau de Change (BDC) and official rates whilst fostering stability in the forex market.

Expressing optimism on the impact of the reforms, he said the apex bank will continue to “strengthen our mechanisms to constantly be on the watch out for market participants and to ensure that all those who are in that market are subjected to the best practices and those who fail to conform would be appropriately dealt with.”

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Cardoso pointed out that the recent initiatives and products, such as the non-resident BVN and accounts,s were in response to the discourse between the apex bank and Nigerians in the diaspora. Cardoso said,d “I am very confident we will see a positive outcome. We are already seeing the impact, which is already starting to show.

Meanwhile, he said a compliance department is being set up to address challenges, align with global standards, and build a more transparent and resilient financial sector to drive Nigeria’s economic growth and development.

“This department will be inward-facing and outward-facing as well. The department will be functional by the end of February, so I advise you to stay tuned,” he stated.