The Central Bank of Nigeria has announced operational changes to the foreign exchange market.
The changes announced by CBN includes the re-introduction of the “willing buyer, willing seller” model at the I&E window, which literally meant the floating of the naira to allow market forces determine the price.
Investogist reported earlier on Wednesday that the Nigerian currency, the naira has been officially floated at the I&E window, after many years of resistance by the Central Bank of Nigeria.
Although the currency exchanged at N750.00 to the dollar at 12 noon, at the end of trading, it closed at N664.04 per US dollar on at I&E window.
In a press release on Wednesday, the apex bank informed all authorized 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 (l&E) window. Applications for medicals, school fees, BTAPTA, and SMEs would continue to be processed through deposit money banks.
- Re-introduction of the “Willing Buyer, Willing Seller” model at the l&E Window. Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FMD/DIR/CIR/GEN/O8/007. 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 l&E window, calculated to two (2) decimal places.
- Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures. Limits on overbought positions shall be zero.
- Re-introduction of order-based two-way quotes, with bid-ask spread of N1. All transactions shall be cleared by a Central Counter Party (CCP).
- Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades.
- The operational hours of trades shall be from 9am to 4pm, Nigeria time.
- Cessation of RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from 30 June 2023.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur