The official exchange rate for the Nigerian Naira (NGN) to the United States Dollar (USD) stands at ₦741.85 per $1, as reported by the FMDQ Security Exchange, the official forex trading portal, for today, October 8, 2023.
This official rate reflects a comparison with the previous day’s data, indicating that the Naira opened at ₦766.82 per dollar on Friday, October 6, 2023, and closed at ₦741.85 per $1 on the same day.
However, the Naira’s performance on the black market paints a different picture, with an exchange rate soaring as high as ₦1000 per Dollar. This stark contrast comes despite the Central Bank of Nigeria (CBN) announcing the unification of all segments of the foreign exchange market.
The CBN, in a circular issued on June 14, 2023, declared the abolition of segmentation, consolidating all segments into the Investors and Exporters (I&E) window. The circular further reinstated the “Willing Buyer, Willing Seller” model at the I&E Window and set guidelines for government-related transactions.
Key points from the CBN circular include:
- Abolishment of Segmentation: All FX windows are now merged into the Investors and Exporters (I&E) window, while applications for purposes like medicals, school fees, BTA/PTA, and SMEs continue to be processed through deposit money banks.
- Operational Rate: Government-related transactions will be based on the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two decimal places.
- Trading Limits: Proscription of trading limits on oversold FX positions, with permission to hedge short positions with OTC futures. Limits on overbought positions are set at zero.
- Bid-Ask Spread: Reintroduction of order-based two-way quotes with a bid-ask spread of N1, and all transactions will be cleared by a Central Counter Party (CCP).
- Order Book Reintroduction: Reintroduction of the Order Book to ensure transparency of orders and seamless execution of trades.
- Operational Hours: Trading hours are set from 9 a.m to 4 p.m, Nigeria time.
The CBN noted that further guidance on operational changes would be communicated to authorized dealers and the general public in due course.
These changes signify a notable shift in Nigeria’s foreign exchange market, suggesting that the country has eased its control of the Naira, allowing it to float more freely. A free-floating exchange rate occurs when a government refrains from influencing the external value of its currency, letting market forces solely determine exchange rates.