Today, September 20, 2023, let’s take a look at the exchange rate between the United States Dollar (USD) and the Nigerian Naira (NGN). Findwhosabi News has gathered information on the official exchange rate, including rates from Bureau De Change (BDC) and the Central Bank of Nigeria (CBN).
Official Exchange Rate for Dollar to Naira Today:
As per data released by the FMDQ Security Exchange, the official forex trading portal, the exchange rate between the Naira and the US Dollar stands as follows:
- Opening Rate on Monday, September 18, 2023: ₦769.89 per US Dollar
- Closing Rate on Monday, September 18, 2023: ₦773.98 per US Dollar
Now, let’s delve into recent developments in Nigeria’s foreign exchange (FX) market:
CBN’s Unification of FX Market:
On June 14, 2023, the Central Bank of Nigeria (CBN) made a significant announcement regarding the unification of all segments of the forex exchange market. In a circular issued by the CBN, it was revealed that all FX windows have been consolidated into what is known as the Investors and Exporters (I&E) window.
This move by the apex bank is part of a series of immediate changes aimed at streamlining operations within Nigeria’s FX market. Here are some key highlights from the circular:
- Abolishment of segmentation: All FX segments are now integrated into the Investors and Exporters (I&E) window. However, specific applications like medicals, school fees, BTA/PTA, and SMEs will still be processed through deposit money banks.
- Re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window: This model will guide operations within the I&E window and is based on an existing circular from April 21, 2017.
- Operational rate for government-related transactions: The operational rate for all government-related transactions will be determined as the weighted average rate of the previous day’s executed transactions at the I&E window, calculated to two decimal places.
- Proscription of trading limits: The circular prescribes that trading limits on oversold FX positions will be eliminated. Moreover, entities will be allowed to hedge short positions with OTC futures, while limits on overbought positions will be set at zero.
- Re-introduction of order-based two-way quotes: This involves bid-ask spreads of N1, and all transactions will be cleared by a Central Counter Party (CCP).
- Reintroduction of Order Book: This is designed to enhance transparency of orders and facilitate seamless execution of trades.
- Operational hours of trades: Trading hours will be from 9 a.m to 4 p.m, Nigeria time.
The CBN has indicated that additional guidance on these operational changes will be communicated to authorized dealers and the general public in due course.
In summary, these changes signify that Nigeria is allowing the Naira to have more flexibility in the foreign exchange market, transitioning towards a free-floating exchange rate system. This approach enables market forces to play a more significant role in determining the exchange rate, reducing central bank intervention.
It’s important to note that a free-floating exchange rate is one where the government does not actively influence the external value of its currency, leaving it to be determined by market dynamics. This move holds implications for Nigeria’s monetary policy and its interactions with global financial markets.