Forex Traders Confirm IMTOs Now Channel Remittances Through Official Market as Oil Firms Increase Dollar Sales

Nigeria’s foreign exchange market is experiencing renewed stability following reports from traders that International Money Transfer Operators (IMTOs) have stopped diverting diaspora remittances away from official channels. According to market operators, these remittances, which had long been trapped in unofficial routes, are now being directed into the formal system, a development that is boosting dollar liquidity and easing pressure on the naira. For several years, IMTOs were accused of diverting inflows to parallel markets to take advantage of arbitrage opportunities created by wide exchange rate differentials. This practice limited the supply of foreign currency available to authorised dealers and contributed to persistent exchange rate volatility. However, traders now say the loopholes have been closed. They attribute this to stricter compliance requirements, reduced profit margins from diversion, and enhanced monitoring by the Central Bank of Nigeria (CBN). “The trend has changed,” a dealer at the Lagos market explained. “Remittances are flowing through the official channels, and coupled with increased dollar sales from oil companies, we are seeing a healthier supply situation in the FX market.” The role of oil companies has also been significant in this turnaround. With crude oil prices rebounding and Nigeria improving its production output, oil majors and indigenous producers have stepped up dollar sales locally. These inflows, alongside remittances, have helped narrow the gap between the official and parallel market rates, boosting market confidence. The CBN’s interventions have further supported the market. The introduction of the FX Market Code, which sets out new standards for governance, settlement, and transparency, has compelled operators to align with global best practices. The apex bank has also injected dollars into the system when necessary to stabilise the naira. Earlier this year, it was reported that nearly $200 million was supplied to calm market volatility. Financial analysts say these combined efforts are yielding positive results. With greater liquidity in the system and increased compliance among IMTOs, the naira has shown resilience in recent weeks. The narrowing of the exchange rate spread between official and parallel markets is viewed as evidence that reforms are working. Despite the progress, concerns remain about sustainability. Analysts warn that disruptions in oil revenues, potential policy changes in remittance-source countries, or a return of arbitrage incentives could undermine the gains. Proposals in some jurisdictions to tax remittances are also seen as a possible risk to future inflows. Nevertheless, traders are optimistic that with continued enforcement of regulations, sustained dollar inflows from oil companies, and ongoing reforms by the CBN, Nigeria’s foreign exchange market could enjoy greater stability in the months ahead.