According to recent data released by the FMDQ Security Exchange, the official forex trading portal, the exchange rate between the Naira and the US dollar opened at ₦760.39 per dollar on Monday, July 3, 2023. It later closed at ₦741.50 per dollar on the same day.
A significant development in Nigeria’s forex market occurred on Wednesday, 14th June 2023, when the Central Bank of Nigeria (CBN) announced the unification of all segments of the forex exchange (FX) market. This consolidation involved the collapsing of all FX windows into the investors and exporters (I&E) window.
The CBN’s circular emphasized the elimination of segmentation and stated that applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks. Furthermore, the “Willing Buyer, Willing Seller” model was reintroduced at the I&E Window, with all eligible transactions permitted to access foreign exchange through this window.
To ensure transparency and seamless execution of trades, the CBN reintroduced order-based two-way quotes with a bid-ask spread of N1. All transactions shall be cleared by a Central Counter Party (CCP), and the reintroduction of the Order Book aims to enhance the transparency of orders and trade execution. The operational hours for trades are set from 9am to 4pm, Nigeria time.
In terms of determining the operational rate for government-related transactions, the CBN specified that it shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, rounded to two decimal places. Moreover, the circular outlined the proscription of trading limits on oversold FX positions, permitting the hedging of short positions with OTC futures. Conversely, overbought positions shall have a limit of zero.
It is important to note that the recent changes to Nigeria’s FX market operations indicate a relaxation of control over the Naira, allowing the local currency to freely float. This implies that the exchange rate will be determined by market forces, without direct intervention from the central bank.
The CBN assured that further guidance on the operational changes would be communicated to authorized dealers and the general public in due course.
In conclusion, the official exchange rate for the Dollar to Naira on 04 July 2023, as per the data from the FMDQ Security Exchange, opened at ₦760.39 per dollar and closed at ₦741.50 per dollar. The recent unification of Nigeria’s forex exchange market segments by the CBN reflects a shift towards a more liberalized and market-driven approach to the Naira’s exchange rate.