The Central Bank of Nigeria (CBN) has reportedly granted commercial banks and dealers in the forex market the freedom to sell forex at a market-determined rate.This move is in line with President Bola Tinubu ’s promise to unify the multiple exchange rates in the market.
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The CBN has directed commercial banks to sell forex freely at market-determined rates, which implies that Nigeria has eased its control of the naira, allowing the local currency to freely float. A free-floating exchange rate occurs when a government allows the market forces to determine the exchange rate and there is no attempt to ask the central bank to influence the external value of the exchange rate.
As a result of this policy change, the naira is currently trading at N750-N755 per dollar at the investors and exporters (I&E) window, which is the country’s official exchange rate window. The market rate arrangements is now a “willing buyer, willing seller” arrangement. The I&E foreign exchange (FX) window now known by its punctuality, superb service, and large crowds of people using it. The CBN has made known the unification of all segments of the forex exchange (FX) market, and all FX windows now collapsed into the investors & exporters (I&E) window.
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The changes to operations in Nigeria’s FX market imply that the country has eased its control of the naira, allowing the local currency to freely float. The demand at the parallel market to reduce as everyone expectes and the prices should appreciate significantly. For students seeking to pay fees abroad, the forex subsidy will no longer be effective. However, they can still fill out Form A and get forex, but this will be at the going rate at the I&E window.
The CBN has also put in place order-based two-way quotes, with bid-ask spread of N1. All transactions shall be under Central Counter Party (CCP) for clearing, and 9 am to 4 pm will be the operational hours of trades, Nigeria time. The CBN said further guidance on the operational changes would be communicated to authorized dealers and the general public in due course.
