Today’s official exchange rate for the US dollar to the Nigerian Naira, as per data from the FMDQ Security Exchange, reveals that the Naira opened at ₦788.17 per dollar and closed at ₦742.93 per dollar on Tuesday, July 18, 2023.
The Central Bank of Nigeria (CBN) recently announced the unification of all segments of the foreign exchange (FX) market. This means that all FX windows have been consolidated into the investors and exporters (I&E) window. The CBN aims to implement immediate changes in the Nigerian FX market.
According to the CBN circular, the segmentation of FX operations has been abolished, and applications for medicals, school fees, BTA/PTA, and SMEs will continue to be processed through deposit money banks. The “Willing Buyer, Willing Seller” model has been reintroduced at the I&E window, and eligible transactions can access foreign exchange at this window. Government-related transactions will be based on the weighted average rate of the preceding day’s executed transactions at the I&E window.
The CBN has also prescribed trading limits on oversold FX positions, allowing short positions to be hedged with OTC futures, while overbought positions are limited to zero. Order-based two-way quotes with a bid-ask spread of N1 have been reintroduced, and all transactions will be cleared by a Central Counter Party (CCP). The reintroduction of the Order Book ensures transparency and seamless execution of trades. The operational hours for trades are from 9am to 4pm Nigerian time.
The CBN has stated that further guidance on these operational changes will be communicated to authorized dealers and the general public in due course.
These operational changes indicate that Nigeria has relaxed its control over the Naira, allowing the local currency to freely float. A free-floating exchange rate occurs when the government lets market forces determine the exchange rate without attempting to influence it through the central bank.