Understanding the Dollar to Naira Exchange Rate Dynamics

Let’s distill the essential information regarding the Dollar to Naira exchange rate and recent policy updates from the Central Bank of Nigeria (CBN).

Current Exchange Rates:

• Official Rate: The Naira opened at ₦1471.42 per $1 on June 13 and closed at ₦1482.72 per $1 on June 14, 2024, according to the FMDQ Security Exchange.
• Black Market Rate: Trading at approximately ₦1,470 per Dollar.

CBN Policy Changes:

1. Unified FX Market: All forex segments are now consolidated into the Investors & Exporters (I&E) window. Transactions for medicals, school fees, BTA/PTA, and SMEs continue through banks.
2. Willing Buyer, Willing Seller Model: Reintroduced to guide operations at the I&E Window, allowing eligible transactions to access forex.
3. Government Transaction Rate: Based on the previous day’s weighted average rate at the I&E window.
4. Trading Limits Adjusted: No limits on oversold positions, with permission to hedge short positions using OTC futures. Zero limits on overbought positions.
5. Transparent Trading: Reintroduction of order-based two-way quotes and order book, ensuring transparency and seamless trade execution.
6. Operational Hours: Trades will occur from 9 a.m. to 4 p.m., Nigeria time.

Free-Floating Exchange Rate:

• Market-Determined Value: Nigeria is transitioning to a system where the Naira’s value is determined by market forces, enhancing stability and reflecting true currency value.