The Central Bank of Nigeria, CBN, announced measures to liberalise the market on Tuesday, including the elimination of multiple exchange rates and the freedom for banks to buy and sell foreign exchange at any rate based on a willing buyer and willing seller arrangement.
It was reported on Wednesday by the CBN that the naira lost almost half of its value in the official market as the exchange rate in the Investors and Exporters (I&E) window rose to N664.04 per dollar from N471.67 per dollar on Tuesday.
Director of Financial Markets Dr. Angela Sere-Ejembi announced the new measures in a press release titled “Operational Changes to the Foreign Exchange Market”: “The Central Bank of Nigeria (CBN) wishes to inform all authorised dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange (FX) Market:
“Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters (I&E) window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.
“Re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window: Operations in this window shall be guided by the extant circular on the establishment of the window, dated April 21, 2017, and referenced FMD/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window.
” The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.
“Proscription of trading limits on oversold FX positions with permission to hedge short positions with Over-The Counter-futures. Limits on overbought positions shall be zero.
“Re-introduction of order-based two-way quotes, with a bid-ask spread of N1. All transactions shall be cleared by a central counterparty (CCP).
“Reintroduction of the Order Book to ensure transparency of orders and seamless execution of trades. The operational hours of trade shall be from 9 a.m. to 4 p.m., Nigerian time. Cessation of the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from June 30, 2023.
“Further guidance on these matters shall be communicated in due course. All market participants and the general public are kindly enjoined to abide by these rules.”
According to information from the FMDQ, the I&E window exchange rate closed on Wednesday at N664.04 for every dollar, up from N471.67 on Tuesday.
On the contrary, the naira appreciated by N13 in the parallel market as the exchange rate dropped to N755 per dollar, from N768 per dollar on Tuesday.