Today’s official exchange rate between the US Dollar and the Nigerian Naira, based on data from the FMDQ Security Exchange, reveals that the Naira began trading at ₦778.49 per dollar and closed at ₦782.38 per dollar on August 9, 2023.
Unification of Forex Exchange Market by CBN
The Central Bank of Nigeria (CBN) made a significant move on June 14, 2023, by unifying all segments of the forex exchange market. This entailed collapsing all FX windows into the Investors & Exporters (I&E) window.
The CBN’s announcement included the following key changes:
Abolishment of Segmentation: All segments were merged into the Investors and Exporters (I&E) window. Transactions for medicals, school fees, BTA/PTA, and SMEs would still be processed through deposit money banks.
“Willing Buyer, Willing Seller” Model: The I&E window reintroduced this model, allowing eligible transactions to access foreign exchange. The operational rate for government-related transactions would be the weighted average rate of the previous day’s executed transactions at the I&E window.
Prohibition of Trading Limits: Trading limits on oversold FX positions were prohibited, with permission to hedge short positions using OTC futures. Overbought positions were limited to zero.
Reintroduction of Order-Based Quotes: Order-based two-way quotes were reintroduced, with a bid-ask spread of N1. Transactions were to be cleared by a Central Counter Party (CCP).
Order Book and Operational Hours: An Order Book was reinstated to ensure transparent orders and smooth trade execution. The operational hours for trades were set from 9 am to 4 pm, Nigerian time.
The CBN indicated that further guidance on these operational changes would be communicated to authorized dealers and the general public in due course.
This move aimed to streamline and enhance the Nigerian FX market, promoting transparency, efficiency, and consistency in forex exchange operations.