In a significant move impacting the financial landscape, the official exchange rate between the Dollar and Naira in Nigeria has been unveiled, reflecting the nation’s transition towards a free-floating currency system. The Central Bank of Nigeria (CBN) has collapsed all foreign exchange (FX) market segments into the Investors and Exporters (I&E) window, marking a departure from the previous segmented structure.
According to data obtained by Gatekeepers News, the official exchange rate on the FMDQ Security Exchange, the official forex trading portal, showed the Naira opening at ₦1478.12 per dollar on February 1, 2024, and closing at ₦1435.53 per $1 on February 2, 2024.
Despite the official rates, the black market is witnessing the Naira trading as high as ₦1,425 per Dollar, raising questions about the effectiveness of the CBN’s move to unify all segments of the foreign exchange market.
The CBN, in a circular dated June 14, 2023, announced the abolition of segmentation, consolidating all FX windows into the I&E window. Notably, transactions for medicals, school fees, BTA/PTA, and SMEs will continue to be processed through deposit money banks.
The reintroduction of the “Willing Buyer, Willing Seller” model at the I&E Window is part of the operational changes. The operational rate for government-related transactions will be the weighted average rate of the preceding day’s executed transactions at the I&E window.
Additionally, trading limits on oversold FX positions have been proscribed, with permission to hedge short positions with over-the-counter (OTC) futures. The reintroduction of order-based two-way quotes, operational hours from 9 a.m to 4 p.m Nigeria time, and the reintroduction of the Order Book for transparency further characterize the revamped system.
The CBN emphasized that further guidance on operational changes would be communicated to authorized dealers and the general public in due course. The adjustments in the FX market suggest a loosening of control over the Naira, signaling a shift towards a more market-driven exchange rate system in Nigeria.
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