As per the data released on the FMDQ Security Exchange, the official forex trading portal, the Naira commenced trading at ₦911.67 per dollar on Friday, December 29, 2023, and concluded at ₦907.11 per $1 on the same day.
Discrepancy with Black Market Rates:
Contrary to the official rates, the black market is witnessing the Naira trading as high as ₦1,175 Naira per Dollar. This is noteworthy, especially given the recent announcement by the Central Bank of Nigeria (CBN) about the unification of all segments of the foreign exchange Naira market.
CBN’s Recent Circular:
On June 14, 2023, the CBN issued a circular signaling the abolition of segmentation in the foreign exchange market. All segments are now consolidated into the Investors and Exporters (I&E) window. Notably, applications for medicals, school fees, BTA/PTA, and SMEs will continue to be processed through deposit money banks.
Key Highlights of the Circular:
- Re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window.
- Operational rate for government-related transactions to be the weighted average rate of the preceding day’s executed transactions at the I&E window.
- Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures.
- Re-introduction of order-based two-way quotes with a bid-ask spread of N1.
- Reintroduction of the Order Book for transparency and seamless execution of trades.
- Operational hours of trades from 9 a.m to 4 p.m, Nigeria time.
Implications of the Changes:
The recent alterations to the FX market operations signify Nigeria’s move towards easing control over the Naira, allowing the local currency to float freely. A free-floating exchange rate implies that the government permits the exchange rate to be determined solely by market forces, with no attempt to influence it through the central bank.
The CBN has hinted at providing further guidance on these operational changes to authorized dealers and the public in the near future. Stay tuned for more updates on this developing story.
Disclaimer: Exchange rates are subject to fluctuation and may vary based on market conditions.