In today’s financial update, Findwhosabo News brings you the latest exchange rate for the US Dollar to the Nigerian Naira, along with significant developments in the foreign exchange market in Nigeria.
Official Exchange Rate: According to data obtained from the FMDQ Security Exchange, the official forex trading portal, the exchange rate between the Naira and the US Dollar opened at ₦766.82 per dollar on Wednesday, October 04, 2023, and closed at ₦756.21 per $1 on the same day.
Black Market Rates: However, it is worth noting that the Naira is currently trading as high as N1000 per Dollar in the black market. This significant difference between the official and black market rates persists despite the Central Bank of Nigeria (CBN) announcing the unification of all segments of the foreign exchange market.
CBN’s Market Unification Announcement: The Central Bank of Nigeria (CBN) made a pivotal announcement on June 14th, 2023, indicating the abolition of segmentation in the foreign exchange market. The CBN consolidated all FX windows into the Investors and Exporters (I&E) window. Key points from this announcement include:
- The reintroduction of the “Willing Buyer, Willing Seller” model at the I&E Window.
- All government-related transactions would be based on the weighted average rate of the preceding day’s executed transactions at the I&E window.
- Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures.
- The reintroduction of order-based two-way quotes with a bid-ask spread of N1.
- Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades.
- The operational hours of trades from 9 a.m to 4 p.m, Nigeria time.
These changes signify a significant shift in Nigeria’s approach to its foreign exchange market, indicating a move towards a more flexible exchange rate regime.
Free-Floating Exchange Rate: The recent developments suggest that Nigeria has taken steps towards a free-floating exchange rate system. In such a system, a government allows market forces to solely determine exchange rates, with no intervention by the central bank to influence the external value of the currency. This shift in policy may have contributed to the disparity between the official and black market exchange rates.
The Central Bank of Nigeria has indicated that further guidance on these operational changes will be communicated to authorized dealers and the general public in the future.
These developments in Nigeria’s foreign exchange market have far-reaching implications for businesses, investors, and individuals dealing with foreign currencies. Findwhosabi News will continue to monitor and report on these developments as they unfold.