As of August 22, 2023, the official exchange rate between the Nigerian Naira and the US Dollar is as follows:
- Opening rate: ₦761.82 per dollar
- Closing rate: ₦739.52 per dollar
The Central Bank of Nigeria (CBN) announced the unification of all segments of the forex exchange market, collapsing them into the Investors and Exporters (I&E) window. This move signifies the easing of control over the Naira, allowing it to float freely based on market forces.
Key changes to the operations in the FX market include:
- Abolishment of Segmentation: All segments of the market are collapsed into the I&E window, including applications for medicals, school fees, BTA/PTA, and SMEs.
- Willing Buyer, Willing Seller Model: The I&E window will operate based on the “Willing Buyer, Willing Seller” model, allowing eligible transactions to access foreign exchange at this window.
- Operational Rate for Government Transactions: 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.
- Proscription of Trading Limits: Trading limits on oversold FX positions are removed, with permission to hedge short positions using OTC futures. Limits on overbought positions will be zero.
- Reintroduction of Order-Based Two-Way Quotes: Bid-ask spread of N1 will be applied. All transactions will be cleared by a Central Counter Party (CCP).
- Reintroduction of Order Book: This ensures transparency of orders and seamless execution of trades.
- Operational Hours: Trades will be conducted from 9 a.m to 4 p.m, Nigeria time.
The CBN’s changes signify a shift towards a more market-driven approach to determining the Naira’s exchange rate, allowing it to float freely based on supply and demand dynamics. This is in contrast to a controlled or fixed exchange rate system where the central bank actively intervenes to maintain a certain exchange rate level.